EXTRAORDINARY MEETING OF CABINET

AGENDA

Meeting to be held in the Ceres Suite, Worksop Town Hall, S80 2AH on Tuesday, 8th January 2019 at 6.30pm

(Please note time and venue)

Please turn mobile telephones to silent during meetings. In case of emergency, Members/officers can be contacted on the Council’s mobile telephone: 07904 001705.

In accordance with the Openness of Local Government Bodies Regulations 2014, audio/visual recording and photography at Council meetings is permitted in accordance with the Council’s protocol ‘Filming of Public Meetings’. CABINET

Membership 2018/19

Councillors: K Dukes, J Evans, S A Greaves, J A Leigh, D G Pidwell, S Scotthorne, S E Shaw and J White

Substitute Members: None

Cabinet Members:

- Policy, Strategy and Communications: Councillor S A Greaves
- Economic Development: Councillor J White
- Corporate Services: Councillor K Dukes
- Finance: Councillor J Evans
- Health and Community Wellbeing: Councillor S E Shaw
- Housing: Councillor S Scotthorne
- Neighbourhoods: Councillor J A Leigh
- Transport and Infrastructure: Councillor D G Pidwell

Advisory Members: Councillor H M Brand (Non-Voting)

Liaison Members: Councillors H Burton, T Critchley, S Fielding and T Taylor (Non-Voting)

Quorum: 2 Members

Lead Officer for this Meeting Mr N Taylor

Administrator for this Meeting Cara Hopkinson EXTRAORDINARY MEETING OF CABINET

8th JANUARY 2018

AGENDA

1. APOLOGIES FOR ABSENCE

2. DECLARATIONS OF INTEREST BY MEMBERS AND OFFICERS * (Members’ and Officers’ attention is drawn to the attached notes and form) (pages 5-6) (a) Members (b) Officers

3. FORWARD PLAN * (pages 7-10)

SECTION A – ITEMS FOR DISCUSSION IN PUBLIC

Key Decisions

4. REPORT(S) OF THE CABINET MEMBER – CORPORATE SERVICES * (a) Council Tax Reduction Scheme 2019/20 (Key Decision No. 720) (pages 11 - 16)

5. REPORT(S) OF THE CABINET MEMBER – FINANCE * (a) General Fund Capital Programme 2019/10 – 2023/24 (Key Decision No. 714) (pages 17 - 28) (b) Housing Capital Programme 2019/20 – 2023/24 (Key Decision No. 724) (pages 29 - 36) (c) Housing Revenue Account Budget 2019/20 and Future Years to 2023/24 (Key Decision No. 725) (pages 37 - 46) (d) Medium Term Financial Plan 2019/20 – 2023/24 (Key Decision No. 726) (pages 47 - 64) (e) Calculation of Council Tax Base 2019/20 (Key Decision No. 727) (pages 65 - 72) (f) Property Asset Management Plan 2019/20 Update (Key Decision No. 728) (pages 73 - 84)

Other Decisions

None

Exempt Information Items

The press and public are likely to be excluded from the meeting during the consideration of the following items in accordance with Section 100A(4) of the Local Government Act 1972.

SECTION B - ITEMS FOR DISCUSSION IN PRIVATE

Key Decisions

None

Other Decisions

6. REPORT OF THE CABINET MEMBER – HOUSING\* (a) Housing Service Review (pages 85 - 95)

- Report attached NOTES:

1. The papers enclosed with this Agenda are available in large print if required.

2. Copies can be requested by contacting us on 01909-533252 or by e-mail cara.hopkinson@bassetlaw.gov.uk

EFFECTIVE DATE OF DECISIONS

1. All key decisions made at this meeting will be referred to the Overview and Scrutiny Committee and will not come into force until that Committee has considered the decisions and has decided not to "call in" any decision.

2. A copy of all non key decisions will be sent to all Members of the Council and any four Members may then, within five days, request that any particular decision be referred to the Overview and Scrutiny Committee - in which case the particular decision will not come into force until that Committee has considered the decision and has decided not to "call in" the same. If no such request is made decisions will come into effect at the end of the five day period. Agenda Item No. 3

DECLARATION OF INTEREST

COMMITTEE ………………………………………………………………………………………………………

DATE …………………………………………………………………………………

NAME OF MEMBER : ………………………………………………………………………………………

Type of Interest

1. Disclosable Pecuniary
2. Non Pecuniary

| Agenda Item No. | REASON * | Type of Interest (1 or 2) | |-----------------|----------|--------------------------| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

Signed

Dated

Note:

- When declaring an interest you must also state the nature of your interest.

Completion of this form is to aid the accurate recording of your interest in the Minutes. The signed form should be provided to the Minuting Clerk at the end of the meeting.

A nil return is not required.

It is still your responsibility to disclose any interests which you may have at the commencement of the meeting and at the commencement of the appropriate Agenda item. DECLARATION OF INTERESTS

HOW TO USE THIS FORM

There are now only two types of Declaration of Interest:

Disclosable Pecuniary Interests

Non Pecuniary Interests

Details can be found in the Councillors Code of Conduct which is contained in the Council’s Constitution (a summary is printed below)

Upon receipt of the attached form you will need to enter the name and date of the Committee and your own name. By looking at the Agenda you will no doubt know immediately which Agenda Items will require you to make a Declaration of Interest.

Fill in the Agenda Item number in the first column of the form.

Enter the subject matter and any explanations you may wish to add in the second column.

In the third column you will need to enter either if you are declaring a disclosable pecuniary interest, or a non pecuniary interest.

The form must then be signed and dated. Please remember that if during the actual meeting you realise that you need to declare an interest on an additional Agenda Item number please simply amend the form during the meeting.

The form must be handed into the Committee Administrator at the end of the meeting.

NB. The following is a summary prepared to assist Members in deciding at the actual meetings their position on INTERESTS it is not a substitute for studying the full explanation regarding INTERESTS, which is contained in the Council’s Constitution and the Code of Conduct for Councillors, which is legally binding.

Members and Officers are welcome to seek, PREFERABLY WELL IN ADVANCE of a meeting advice from the Council’s Monitoring Officer on INTERESTS.

Disclosable Pecuniary Interests

May relate to employment, office, trade, profession or vocation carried on for profit or gain May relate to sponsorship May relate to contracts May relate to interests in land May relate to licences to occupy land May relate to corporate tenancies May relate to securities

Action to be Taken

Must disclose to the meeting

- existence of the interest
- the nature of the interest
- withdraw from the room
- not seek improperly to influence a decision on the matter

Non Pecuniary Interests

May relate to any body of which you are a member or in a position of general control or management and to which you are appointed or nominated by the Council May relate to any person from whom you have received a gift or hospitality with an estimated value of at least £25 A Member may also have a non pecuniary interest where a decision in relation to that business might reasonably be regarded as affecting wellbeing or the wellbeing of other council tax payers, or ratepayers or inhabitants in the electoral division or ward, as the case may be, affected by the decision.

(Note – there are special provisions relating to “Sensitive Interests” which may exclude the above provisions in certain circumstances.) | EXTRAORDINARY CABINET 8th January 2019 | EXTRAORDINARY COUNCIL 31st January 2019 | CABINET 14th February 2019 | COUNCIL 7th March 2019 (Budget) | CABINET 19th March 2019 | CABINET 4th June 2019 | |----------------------------------------|----------------------------------------|---------------------------|---------------------------------|-------------------------|-----------------------| | General Fund Capital Programme 2019/20 – 2023/24 (Key Decision No. 714) | General Fund Capital Programme 2019/20 – 2023/24 (Key Decision No. 714) | Delivery of Leisure and Well-Being Objectives (Key Decision No. 736) CONFIDENTIAL Cabinet Area: Neighbourhoods | Treasury Management Policy and Strategy (Key Decision No. 712) Cabinet Area: Finance | Leisure Management Contract (Key Decision No. 386) CONFIDENTIAL Cabinet Area: Neighbourhoods | Performance Indicator Outturn Report – Q4 2018/19 (Key Decision No. 735) Cabinet Area: Policy, Strategy and Communications | | Council Tax Reduction Scheme 2019/20 (Key Decision No. 720) Cabinet Area: Corporate Services | Council Tax Reduction Scheme 2019/20 (Key Decision No. 720) Cabinet Area: Finance | Land at Radford Street, Worksop (Key Decision No. 585) Cabinet Area: Economic Development | General Fund Revenue (Key Decision No. 729) Cabinet Area: Finance | Performance Indicator Outturn Report – Q3 2018/19 (Key Decision No. 733) Cabinet Area: Policy, Strategy and Communications | | Housing Capital Programme 2019/20 – 2023/24 (Key Decision No. 724) Cabinet Area: Finance | Housing Capital Programme 2019/20 – 2023/24 (Key Decision No. 724) Cabinet Area: Finance | Leverton Road, Retford (Key Decision No. 572) Cabinet Area: Economic Development | Review of Polling Districts & Polling Places (Key Decision No.734) Cabinet Area: Corporate Services | | Housing Revenue Account Budget 2019/20 and Future Years to 2023/24 (Key Decision No. 725) Cabinet Area: Finance | Housing Revenue Account Budget 2019/20 and Future Years to 2023/24 (Key Decision No. 725) Cabinet Area: Finance | Care Leavers Council Tax Discount Scheme – Review (Key Decision No. 689) Cabinet Area: Corporate Services | | | | | EXTRAORDINARY CABINET 8th January 2019 | EXTRAORDINARY COUNCIL 31st January 2019 | CABINET 14th February 2019 | COUNCIL 7th March 2019 (Budget) | CABINET 19th March 2019 | CABINET 4th June 2019 | |----------------------------------------|----------------------------------------|---------------------------|---------------------------------|------------------------|----------------------| | Medium Term Financial Plan 2019/20 – 2023/24 (Key Decision No. 726) Cabinet Area: Finance | Medium Term Financial Plan 2019/20 – 2023/24 (Key Decision No. 726) Cabinet Area: Finance | Workshop Creative Village – Update (Key Decision No. 698) Cabinet Area: Economic Development | | | | | Council Tax Base 2019/20 (Key Decision No. 727) Cabinet Area: Finance | Council Tax Base 2019/20 (Key Decision No. 727) Cabinet Area: Finance | Harworth and Bircotes Town Centre Growth (Key Decision No. 700) Cabinet Area: Economic Development | | | | | Property Asset Management Plan 2019/20 (Key Decision No. 728) Cabinet Area: Finance | Property Asset Management Plan 2019/20 (Key Decision No. 728) Cabinet Area: Finance | Empty Homes Strategy (Key Decision No. 703) Cabinet Area: Housing | | | | | Housing Service Review (Key Decision No. 738) Cabinet Area: Housing CONFIDENTIAL | | Treasury Management Policy and Strategy (Key Decision No. 712) Cabinet Area: Finance | | | | | | | Digital Update (Key Decision No. 715) Cabinet Area: Corporate Services | | | | | EXTRAORDINARY CABINET 8th January 2019 | EXTRAORDINARY COUNCIL 31st January 2019 | CABINET 14th February 2019 | COUNCIL 7th March 2019 (Budget) | CABINET 19th March 2019 | CABINET 4th June 2019 | |----------------------------------------|----------------------------------------|-----------------------------|---------------------------------|-------------------------|------------------------| | General Fund Revenue (Key Decision No. 729) Cabinet Area: Finance | | Capital Investment Strategy (Key Decision No. 731) Cabinet Area: Finance | | The Mayflower 400 Legacy Oaks Project (Key Decision No. 737) Cabinet Area: Economic Development | | Grounds Maintenance Resourcing Cabinet Area: Neighbourhoods CONFIDENTIAL | CABINET

The voting members of the Cabinet, which is the District Council’s Executive, are shown alongside their area of responsibility. They are all contactable in writing to Bassetlaw District Council, Queen’s Building, Potter Street, Worksop, Notts, S80 2AH, or by telephoning or emailing as shown below:

| COUNCILLOR | AREA OF RESPONSIBILITY | CONTACT | |--------------------------|-----------------------------------------------|-------------------------------------------------------------------------| | Councillor Simon Greaves | Policy, Strategy and Communications | Tel: 07949 129 239 Email: simon.greaves@cllr.bassetlaw.gov.uk | | Councillor Kevin Dukes | Corporate Services | Tel: 07887 657 936 Email: kevin.dukes@cllr.bassetlaw.gov.uk | | Councillor June Evans | Finance | Tel: 07501 384 492 Email: june.evans@cllr.bassetlaw.gov.uk | | Councillor Julie Leigh | Neighbourhoods | Tel: 07432 674 846 Email: julie.leigh@cllr.bassetlaw.gov.uk | | Councillor David Pidwell | Transport and Infrastructure | Tel: 07908 272 984 Email: david.pidwell@cllr.bassetlaw.gov.uk | | Councillor Susan Shaw | Health and Community Well-being | Tel: 07588 626 763 Email: susan.shaw@cllr.bassetlaw.gov.uk | | Councillor Steve Scotthorne | Housing | Tel: 07805 791 799 Email: steve.scotthorne@cllr.bassetlaw.gov.uk | | Councillor Jo White | Economic Development | Tel: 07940 001 710 Email: jo.white@cllr.bassetlaw.gov.uk |

1. **Public Interest Test**

1.1 The author of this report, David Hill, has determined that the report is not confidential.

2. **Purpose of the Report**

2.1 To set the Council’s scheme for Council Tax Reduction (CTR) for 2019/20. This must be in place, following Council approval by 11th March 2019, to come into effect from 1st April 2019.

3. **Background and Discussion**

3.1 Amendments to section 10 of the Local Government Finance Act 2012, includes the requirement for each billing authority to set a local scheme, by the 11th March each year, for Council Tax Reduction, by way of discounts for residents in “financial need”.

3.2 The Secretary of State has the powers to prescribe by regulations, additional requirements that must or must not be included in a scheme. These are contained within The Council Tax Reduction Schemes (Prescribed Requirements) (England) Regulations 2012 and the Council Tax Reduction Schemes (Prescribed Requirements) (England) (Amendment) Regulations. These regulations are updated annually and include provision to allow for the annual uprating of allowances and premiums, without this being classed as a material change to the scheme.

**The current Council Tax Scheme (2018/19)**

3.3 The main features of the current CTR scheme for working-age residents are:

- The scheme identifies each class of person entitled to a reduction. The current scheme has the following classes and maximum CTR amounts:

| Class | Description | Maximum CTR | |---------|-----------------------------------------------------------------------------|-------------| | Class A | Pensioner-age whose income is less than the applicable amount | 100% | | Class B | Pensioner-age whose income is greater than the applicable amount | 100% | | Class | Description | Percentage | |--------|-----------------------------------------------------------------------------|------------| | Class C | Pensioner-age - alternative maximum council tax reduction (second adult rebate) | 100% | | Class D | Working-age whose income is less than the applicable amount | 88% | | Class E | Working-age whose income is greater than the applicable amount | 88% | | Class F | Does not apply to the Bassetlaw scheme – previously working-age second adult rebate | Not applicable | | Class G | Working-age who are protected under this scheme (vulnerable class) | 95% |

- The current definition of a person within Class G is where the claimant or partner qualifies for the Severe Disability Premium in the calculation of Housing Benefit or other Department for Work and Pensions (DWP) benefits. The proposals in paragraph 3.8 below, address the anomaly that may occur once this group migrates to Universal Credit.
- A restriction across all working age groups to the maximum liability for a Band C property.
- The Bassetlaw Scheme also includes a full disregard of War Disablement Benefit, War Widows/Widowers Pension and Armed Forces Independent Payment, agreed under the Council’s Housing Benefits and Council Tax Reduction (disregard of income) Local Scheme Policy.

**Proposed CTR Scheme 2019/20**

3.4 Following a full consultation exercise, it is proposed that the working age schemes set out in paragraph 3.3 above, remain unchanged (subject to any statutory changes within the Council Tax Reduction Schemes (Prescribed Requirements) (England) (Amendment) Regulations).

3.5 The maximum Council Tax Reduction of 88% of the liability (net of all other discounts) to remain the same.

3.6 The maximum Council Tax Reduction of 95% of the liability (net of all other discounts) for the vulnerable (class G) to remain the same.

3.7 All working age groups (class D, E and G) to remain subject to a restriction in the Council Tax charge used, to that of a band C property.

3.8 The current criteria to be placed in Class G and therefore attract a higher level of CTR, will require a minor change to the scheme due to the Severe Disability Premium no longer existing in Universal Credit. The Government has recently announced that those who would have lost SDP due to migrating to Universal Credit, will instead receive a transitional payment. It is therefore proposed to add this to section 18A of the scheme to ensure that this vulnerable group remains in class G.

3.9 To amend Part 3,11(1) of Schedules 1-10– “Procedure for applying for a discretionary reduction”, to allow the electronic Universal Credit form provided by the Department for Work & Pensions, to be accepted as a claim for Council Tax Reduction.

3.10 To amend Part 10 section 37 (1) which states that, “in determining the income of the applicant who has an award of Universal Credit, the authority must use the calculation or estimate of the income of the applicant (or partner) made for the purposes of determining the award of Universal credit.” There are some cases where the data, for example earnings, is incorrect in the Universal Credit calculation, so the assessment of CTR entitlement could therefore also be incorrect. It is proposed to amend the wording of this section of the local scheme, to allow the Local Authority to correct such errors, provided the claimant supplies adequate, documentary evidence, and that they take steps to ask the DWP to correct their data.

4. **Implications**

   a) For service users

   The implications of the proposals in this report are positive for service users in that the Council has managed to preserve the current scheme for a further year.

   Those who migrate to Universal Credit during 2019/20 will have some protection against delays and duplication in applying for CTR, as the proposals will allow the data they provide to the DWP, to be accepted as a CTR claim. In addition, those currently in the vulnerable group would be protected if they lost their Severe Disability Premium due to a move to Universal Credit.

   As there are no changes to the income disregards, or family premium this year, this also protects families from further increases during an uncertain time of further welfare reforms, and keeps incentives to work, with generous earnings disregards.

   b) Strategic & Policy

   As central Government grant is removed further in 2019/20 and beyond, there may be implications on the budget strategy.

   c) Financial – Ref: 19/499

**Funding Arrangements**

**Estimated cost of the current scheme (2018/19)**

| Claim Group | Caseload | 2018/19 estimated expenditure | |------------------------------------------|----------|-------------------------------| | Pension-age (prescribed scheme) | 3,721 | £3.60m | | Vulnerable group (severely disabled) | 873 | £0.83m | | Working-age employed | 652 | £0.39m | | Working-age other | 2,676 | £2.50m | | **CTR SUB TOTAL** | **7,922**| **£7.32m** | | Discretionary CTR Hardship Fund | | £0.035m | | **TOTAL** | | **£7.36m** | Estimated cost of proposed scheme 2019/20 (with a total Council Tax increase of 4.99%)

| Claim Group | Estimated Caseload 2019/20 | 2019/20 estimated expenditure | |------------------------------------|-----------------------------|-------------------------------| | Pension-age (prescribed scheme) | 3,731 | £3.81m | | Vulnerable group (severely disabled)| 888 | £0.89m | | Working-age employed | 647 | £0.43m | | Working-age other | 2,598 | £2.52m | | **CTR SUB TOTAL** | **7,864** | **£7.65m** | | Discretionary CTR Hardship Fund | | £0.03m | | **TOTAL** | | **£7.68m** |

The funding for Council Tax Support is incorporated into the Upper Tier, Lower Tier and Fire funding blocks, which means that it is no longer a separate visible grant. Funding is paid into both Revenue Support Grant (RSG) and the Business Rate Baseline, with 60% funding in the RSG block and 40% funding in the Business Rates Baseline. As this funding is not separately identified, or ring-fenced, it is reasonable to assume that it has been reduced, in line with the annual reduction to the Revenue Support Grant, which will reduce to zero by 2020, and increased in line with the annual uplift to the Business Rates Baseline to give the net estimated funding position.

The cost of the scheme is borne by Bassetlaw DC and its major preceptors in proportion to the Council Tax bill i.e. County 75%, Bassetlaw 10.58%, Police 10.32% Fire 4.1%. For Bassetlaw, the estimated total cost of the current scheme is circa £7.32m in 2018/19, of which Bassetlaw’s share is circa £0.77m.

The proposed scheme described above has an estimated cost of £7.65m for 2019/20. Bassetlaw’s share is estimated at £0.81m, which is an increase of £0.04m. However if trends on reducing caseload continue, this budget pressure may reduce to £0.03m. This additional budget will, be required from the general fund.

d) Legal - Ref: 203/01/2019.

The Council Tax Reduction (Bassetlaw District Council) Scheme 2019-20 will take effect from 1st April 2019.

The Secretary of State has the powers to prescribe, by regulations, additional requirements which must or must not be included in a scheme. These are contained in The Council Tax Reduction Schemes (prescribed requirements) (England) Regulations 2012 and the Council Tax Reduction Schemes (Prescribed Requirements) (England) (Amendment) Regulations.

Any amendments published before the scheme is implemented, together with the amendments proposed in this report, will be included in the final version to commence 1st April.

e) Human Resources

None from this report. 5. **Options, Risks and Reasons for Recommendations**

5.1 Consultation began in October after consideration of several options that would work towards a cost-neutral scheme over a 2 year period, starting from April 2019. This is subject to the final funding announcements prior to the start of 2020. The options consulted on were:

- To reduce the maximum CTR allowed for Working age to 80% or 84%
- To reduce the maximum CTR allowed for Working age vulnerable to 90% or 92%
- To review the disregards that apply to child maintenance and child benefit
- To protect those in the vulnerable group who lose Severe Disability premium when transferred to Universal Credit
- To consider removing family premium for new claims, in line with other benefits
- Options for 2020 onwards were also included in the consultation to look at a discount scheme or an income-banded scheme.

5.2 These options and the risks to collection rates have been analysed against a backdrop of a reducing caseload trend. It is proposed that the maximum CTR levels remain the same at 88% and 95%. It is also proposed to protect those who lose their Severe Disability Premium due to migration to Universal Credit.

5.3 The recommendations in 3.9 and 3.10 of this report are to reduce the risk of delays in claiming CTR, by accepting the Universal Credit claim as a claim form for CTR. This also reduces the requirement to duplicate the collection of some data from the claimant and ensures income details are correct.

5.4 There is currently a risk that incorrect data from the DWP with regard to income, on a universal credit award is used to calculate CTR. The current scheme does not allow the Council to use anything other than the DWP income figure. This is unfair on the claimant, and provided they can verify the correct income, a change to the wording of the scheme, will allow the correct income to be used by the Council.

6. **Conclusions**

6.1 Each year the estimated cost of the Council Tax Reduction Scheme is reviewed together with the funds available to ensure that the scheme is affordable. The estimated cost to the Council of maintaining the current scheme would be circa. £0.81m, an increase of £0.04m. Due to the continuing downward trend in the caseload, it is expected that the budget pressure can be contained within the general fund.

This will need to be kept under review, should the caseload fluctuate in 2019/20 and this will be monitored throughout the year. 7. **Recommendations**

7.1 That Members approve the Council Tax Reduction Scheme 2019/20 as set out in paragraph 3.5 to 3.10 and that this is subject to any further legislation changes and annual up-ratings notified prior to 1st April 2019.

7.2 That this report be referred to the next appropriate Council meeting for consideration.

**Background Papers**

| Background Papers | Location | |--------------------------------------------------------|---------------------------| | Consultation summary 2019/20 | SRBM | | Options appraisal report | SRBM | | Council Tax Reduction Scheme 2019/20 | Members’ Library/website | | Council Tax Reduction Scheme Appendix B (Schedules 1-10)| Members’ Library/website |

1. **Public Interest Test**

1.1 The author of this report, David Hill, has determined that the report is not confidential.

2. **Purpose of the Report**

2.1 To approve the General Fund Capital Programme for 2019/20 to 2023/24.

3. **Background and Discussion**

3.1 The Council's five year capital programme shows the commitment to deliver more efficient services, improve facilities and enable economic development. The programme is approved for the five year period and allows flexibility of investment between the years provided the value of the five year programme is not exceeded for each scheme.

3.2 As part of the overall strategy for capital, the Council restricts the funding of capital schemes via revenue and minimises borrowing, as the revenue implications add to the revenue pressures on the General Fund. This means that the capital programme is predominantly funded using capital resources from the sale of assets, Section 106 contributions, or external grant funding.

3.3 As part of the budget setting process, resources have been reviewed to identify the funding availability for new capital schemes in 2019/20 and future years. As there is a low level of currently available capital funds, the five year capital programme has been split into two elements; one to be approved immediately and the second to be approved once enough capital receipts have been generated from the sale of General Fund capital assets. Further details of the capital funding is provided in section 5 of this report. 4. **Capital Expenditure**

Schemes already approved as part of the 2018/19 Budget setting process:

4.1 Council approved the General Fund Capital Programme 2018/19 to 2022/23 on 14 December 2017.

4.2 The Capital Programme changes throughout the year as projects are developed and spending commitments are made. It is a requirement that the Council approves all variations made to the Capital Programme.

4.3 The currently approved five year General Fund Capital Programme totals **£14.801m**, of which £6.488m relates to 2018/19 schemes and £8.313m relates to schemes approved for the years 2019/20 to 2022/23. Table 1 below shows the breakdown of the approved schemes over the 5 financial years 2018/19 to 2022/23 together with the sources of funding:

| Table 1 | Approved - General Fund Capital Programme | |---------|------------------------------------------| | | 2018/19 | 2019/20 | 2020/21 | 2021/22 | 2022/23 | Total | | | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | | General Fund Capital Expenditure | 6,488 | 4,724 | 1,712 | 1,329 | 548 | 14,801 | | Funded by: | | | | | | | | General Fund Capital Receipts | 1,278 | 810 | 295 | 175 | - | 2,558 | | Government Grants | 969 | 700 | 700 | 700 | - | 3,069 | | Capital Grants and Contributions | 1,318 | 1,860 | 110 | - | - | 3,288 | | S106 Grant/CIL | 1,119 | 670 | - | - | - | 1,789 | | General Fund Reserves | 70 | - | - | - | - | 70 | | Borrowing | 1,734 | 684 | 607 | 454 | 548 | 4,027 | | | 6,488 | 4,724 | 1,712 | 1,329 | 548 | 14,801 |

5. **Capital Funding of New Schemes**

Available Capital Resources:

5.1 Included within the Financial Outturn 2017/18 report, Cabinet approved (19 June 2018) that during 2018/19 **£0.340m** be released from the New Homes Bonus reserve to fund future capital or revenue projects.

5.2 For 2018/19 the Council has been allocated a New Homes Bonus amount of £1.209m, of which £0.500m has been used for mainstream funding in accordance with the New Homes Bonus Strategy. The balance of **£0.708m** is available for funding new capital projects.

5.3 There is currently available **£0.68m** of unallocated General Fund Capital Receipts.

5.4 A capital receipt of **£0.500m** has been received in September 2018, which relates to the return of the 5 year capital Investment the Council made in the Local Authority Mortgage Scheme (LAMS). 5.5 Table 2 below provides a summary of the available resources, which shows there is currently £1.616m which can be allocated to new general fund capital schemes.

| Available General Fund Capital Resources | £'000 | |-----------------------------------------|-------| | **Funded by:** | | | New Homes Bonus - release from EMR | 340 | | 2018/19 New Homes Bonus | 708 | | Unallocated Capital Receipts | 68 | | LAMS investment returned | 500 | | **Total:** | 1,616 |

New General Fund Capital Schemes

5.6 Council approved (14 December 2017) that £1.582m provisional capital schemes could be included in the General Fund Capital programme when enough capital receipts have been generated. As part of this capital budget setting process, those provisional schemes have been reviewed and reduced by £280k. The remaining £1.302m is now proposed to be included in the 2019/20 capital programme and funded from capital receipts. Table 3 below shows the schemes which have been adjusted:

| New Schemes to be funded from Capital Receipts | £'000 | |-----------------------------------------------|-------| | Provisionally approved 17.10.18 | 1,582 | | Schemes reviewed: | | | ICT Refresh reprofiled | -212 | | ICT Refresh reduced | -18 | | Equipment funded from Invest to Save Reserve | -30 | | Pay on exit works - car parks - adjusted | -20 | | **Revised total:** | 1,302 |

New Capital Bids

5.7 The annual outline capital bids have been received and reviewed by the Corporate Management Team. Two of those bids submitted were required urgently and have already been approved by Cabinet (4 December 2018) and are included within the 2018/19 capital programme. The four bids detailed below are included within this budget proposal:

- Bid 1 - Dilapidated Equipment Fire Risk Assessment – A capital budget of £41,000 is proposed to replace defective, end of life cycle switchgear and light fittings and provide emergency lighting and fire detection equipment. These works are to be funded from general fund capital receipts.

- **Bid 2 - Heritage Buildings at Risk** – A capital budget of £80,000 is proposed to assist in the restoration of listed buildings at risk to remove them from the Heritage at Risk register. These works are to be funded from general fund capital receipts.

- **Bid 3 - Empty Homes Loan** – A capital budget of £100,000 is proposed to allow owners of empty properties to borrow funds for renovation works which will enable them to be bought back into use. This scheme is to be funded from general fund capital receipts.

- **Bid 4 - Pilgrims Roots Project** – A further £239,000 is proposed to be added to this project to ensure the Pilgrims Gallery and Pilgrims Trail are delivered in the quality expected by the Heritage Lottery Fund, members, residents and visitors to the museum. This scheme is to be funded by £93k from general fund capital receipts and a further £146k from the Heritage Lottery Grant Fund.

**Further new proposals to be included in the General Fund Capital Budget:**

5.8 Ongoing Vehicle and plant replacements – A further £500k is proposed to be added to the capital programme for 2023/24 this is to be funded through borrowing.

5.9 It is anticipated that the Disabled Facilities Grant will continue to be received at £700k per annum. Therefore, a further £1.4m is proposed to be added to the capital programme to years 2022/23 and 2023/24, which is funded through the Better Care Fund.

5.10 Should all of the above proposals be approved the General Fund Capital budget will increase by **£3.692m** up to **£18.493m**. The proposed new schemes will also utilise all the available general fund capital resources of **£1.616m** and are summarised in Table 4 below: 5.11 Table 5 below shows:

- The current approved capital programme for 2018/19 of £6,488
- The proposed capital programme for 2019/20 of £6,020m and
- The indicative capital programme for years 2020/21 to 2023/24 totalling £5,985m

### Table 4

| PROPOSED NEW CAPITAL SCHEMES | Total Cost £'000 | |------------------------------|------------------| | Provisionally approved 17.10.18 | 1,302 | | New Bids submitted for 2019/20 | | | Equipment Fire Risk Assessments | 41 | | Heritage Buildings at Risk | 80 | | Empty Homes Loans | 100 | | Pilgrims Roots Project | 239 | | Other ongoing Capital Schemes | | | Disabled Facilities Grant | 1,400 | | Vehicle and Plant Replacements | 500 | | Equipment | 30 | | Proposed New Capital Schemes | 3,692 |

**Funded By:**

- Capital Receipts 1,616
- Government Grants (BCF) 1,400
- Other Grants (HLF) 146
- General Fund Reserves 30
- Borrowing 500

**Total Funding** 3,692

### Table 5

| General Fund Capital Programme | 2018/19 | 2019/20 | 2020/21 | 2021/22 | 2022/23 | 2023/24 | Total £'000 | |-------------------------------|---------|---------|---------|---------|---------|---------|-------------| | General Fund Capital Expenditure | 6,488 | 6,020 | 1,946 | 1,501 | 1,308 | 1,230 | 18,493 |

**Funded by:**

- General Fund Capital Receipts 1,278
- Government Grants 969
- Other Grants and Contributions 1,318
- S106 Grant/CIL 1,119
- General Fund Reserves 70
- Borrowing 1,734

**Total Funding:** 6,488

Provisional Approval Pending Future Capital Receipts 5.12 The amount of capital resources available for all of the bids approved by the Corporate Management Team are insufficient, but the schemes are required in order to maintain Council services at a high standard and reduce the future revenue increases in costs.

5.13 Therefore, it is proposed that the following list of schemes in table 6 below, are approved but they cannot commence until enough capital receipts are generated from the future sales of General Fund assets and the New Homes Bonus allocation for 2019/20 is confirmed. In terms of objectivity, no scheme shall commence until an aggregated amount of the required capital resources per financial year is available. Therefore, when £927k of capital resources is available all the schemes listed below for 2019/20 will be added onto the Capital Programme 2019/20 subject to Cabinet approval.

| Scheme Description | 2019/20 | 2020/21 | 2021/22 | 2022/23 | 2023/24 | Total | |--------------------|---------|---------|---------|---------|---------|-------| | ICT Refresh, re-profiled | - | - | 67 | 145 | - | 212 | | Mayflower Pilgrims | 60 | - | - | - | - | 60 | | Middletons | 400 | - | - | - | - | 400 | | Creative Village (industrial units) | 120 | - | - | - | - | 120 | | Canch Masterplan | 347 | - | - | - | - | 347 | | **Totals:** | **927** | - | **67** | **145** | - | **1,139** |

**Table 6**

Reserve list pending further Capital Receipts:

5.14 Any capital schemes that are subject to funding by external parties e.g. European Regional Development Fund (ERDF) are subject to a detailed bidding process against projects submitted by other organisations. If successful, these can provide additional funding for the capital programme and any bids for new schemes will be assessed accordingly.

5.15 A separate report from the Director of Regeneration and Neighbourhoods to the July 2018 Cabinet provided details of the latest position with regard to Section 106 agreements. It identified that the Council holds £0.777m of Section 106 capital contributions that, subject to the conditions attached, can be utilised to fund capital projects going forward.

**Prudential Borrowing**

5.16 In keeping to the Council’s Capital Investment Strategy, unsupported borrowing is minimised to prevent any destabilisation of the General Fund from the interest and Minimum Revenue Provision (MRP) that results from borrowing. Leasing is also tightly controlled within the revenue budgets for the same reason and is rarely used.

5.17 Some of the capital bids are traditional in that the approach to replacing assets e.g. vehicles and plant, is a well-established pattern and these are funded from borrowing. The reason for this is that they used to be funded via leasing, but given the low interest rates over the last few years, the costs of borrowing are a much cheaper option. 5.18 An indicative amount of £0.500m has been added to the capital programme during 2023/24 for vehicle and plant replacements.

6. Summary of Capital Programme 2018/19 to 2023/24

Table 7 below summarises the total value of the General Fund Capital Programme 2019/20 to 2023/24 by the already approved schemes, any new proposals and adjustments. Appendices A and B attached to this report provide further details of the proposed capital schemes.

| Summary of General Fund Capital Programme 2018/19 to 2023/24 | Total Cost £'000 | Detailed in Section: | |-------------------------------------------------------------|------------------|---------------------| | Schemes already approved as part of the 2018/19 Budget setting process | 14,801 | Section 4 Table 1 | | Proposed new schemes to be added to the Capital Programme | 3,692 | Section 5.10 Table 4 | | **Total General Fund Capital Programme 2018/19 to 2023/24** | **18,493** | **Section 5 Table 5** | | Provisional new schemes - pending future capital receipts 2019/20 | 927 | Section 5.13 Table 6 | | Provisional new schemes - pending future capital receipts 2020/21 to 2023/24 | 212 | | | **Total Provisional General Fund Capital Programme 2019/20 to 2023/24** | **1,139** | **Appendix B** |

7. Implications

a) For Service Users.

Bassetlaw’s capital investment in the district is an important factor for residents, but potential schemes and projects outweigh the resources available to the Council. Decisions on what schemes to fund are therefore important.

b) Strategic & Policy

The Capital Programme has been developed with regard to the Council Plan. In particular, it supports the delivery of the Council’s priorities through the Medium Term Financial Plan.

c) Financial - Ref: 19/22

These are included within the main body of the report. Additionally, the revenue consequences of all schemes have been assessed and included within the General Fund revenue base budget.

d) Legal – Ref: 210/01/2019

None arising directly from this report, although this will assist in meeting the Council’s corporate objectives. e) Human Resources

None arising directly from this report.

f) Community Safety, Equalities, Environmental

Some of the capital schemes have positive implications on community safety, equalities and environmental issues, and these have been considered at the project appraisal stage, prior to any recommendations on the capital programme.

g) G.D.P.R.

None arising directly from this report

h) This is Key Decision number 714

8. Options, Risks and Reasons for Recommendations

8.1 Members can decide what schemes to include or exclude. Any schemes which include external finance will have implications for those organisations.

9. Conclusions

9.1 It is imperative that capital schemes are seen to be delivered on time and to budget. Resources are scarce and therefore capital expenditure is approved for three specific reasons:

- there is a demonstrable need for the project;
- it meets the strategic objectives of the Council;
- the benefits are clearly measurable.

It is therefore important that expectations from Members and the public are realistic when approving timescales and determining the project outcomes is key to the successful delivery of projects.

9.2 This report fully allocates the balance of the General Fund capital receipts.

9.3 Members have carefully balanced their competing priorities in their approach to this investment plan and have sought to take stock of our assets. This year the continued investment in all Council services will give benefit to future year’s budgets.

9.4 Council resources in terms of both money and officer time are shrinking and it is important that appropriate time is allocated to project planning before the commencement of a project.

10. Recommendations 10.1 That Cabinet approves the Capital Programme for 2019/20 of £6.020m as shown at Appendix A, and recommends these to full Council on 31 January 2019.

10.2 That Cabinet approves the indicative Capital Programme for 2020/21 to 2023/24 of £5.985m also set out in Appendix A, and recommends these to full Council on 31 January 2019.

10.3 That Cabinet approves the provisional Capital Programme for 2019/20 of £0.927m as shown at Appendix B, which cannot commence until enough Capital Receipts are generated, and recommends these to full Council on 31 January 2019.

10.4 That Cabinet approves the indicative provisional Capital Programme for 2020/21 to 2023/24 of £0.212m as shown at Appendix B, which cannot commence until enough Capital Receipts are generated, and recommends these to full Council on 31 January 2019.

**Background Papers** Capital Bids & Resourcing Statements

**Location** Head of Finance & Property’s office

## GENERAL FUND CAPITAL PROGRAMME 2019/20 TO 2023/24

### APPENDIX A

#### EXPENDITURE SUMMARY

| Project Description | 2019/20 Proposed £'000 | 2020/21 Indicative £'000 | 2021/22 Indicative £'000 | 2022/23 Indicative £'000 | 2023/24 Indicative £'000 | TOTAL £'000 | |----------------------------------------------------------|-------------------------|---------------------------|---------------------------|---------------------------|---------------------------|-------------| | Disabled Facilities Grant | 700 | 700 | 700 | 700 | 700 | 3,500 | | Vehicles & Plant - Replacement | 684 | 607 | 454 | 548 | 500 | 2,793 | | Worksop Town Centre Interventions | 1,800 | 0 | 0 | 0 | 0 | 1,800 | | Retford Beck Flood Alleviation Scheme | 1,100 | 0 | 0 | 0 | 0 | 1,100 | | Flood Alleviation - Small Schemes | 50 | 50 | 50 | 0 | 0 | 150 | | Clarborough Flood Alleviation Scheme | 200 | 200 | 0 | 0 | 0 | 400 | | Play Areas Upgrade | 30 | 30 | 30 | 30 | 0 | 120 | | Planned Maintenance & Capital Upgrades | 100 | 100 | 100 | 0 | 0 | 300 | | Equipment Fire Risk Assessments | 11 | 35 | 10 | 10 | 10 | 76 | | Compliance with Energy Act | 0 | 25 | 25 | 0 | 0 | 50 | | ICT Refresh Project | 99 | 179 | 112 | 0 | 0 | 390 | | Memorial Library | 60 | 0 | 0 | 0 | 0 | 60 | | Heritage / Buildings at Risk | 20 | 20 | 20 | 20 | 20 | 100 | | Resurfacing and Re-lining Public Car Parks | 75 | | | | | 75 | | Langold Lake Resurfacing Works | 25 | | | | | 25 | | Pilgrims Roots Project | 239 | | | | | 239 | | Replacement windows Queens Buildings | 150 | | | | | 150 | | Community Sports | 100 | | | | | 100 | | Gateford Road car park | 100 | | | | | 100 | | Public toilet improvements | 100 | | | | | 100 | | Empty Homes Loan | 100 | | | | | 100 | | Land at Hannah Park Cemetery | 97 | | | | | 97 | | Heating System Upgrade - workshop | 70 | | | | | 70 | | Grinder for Sharpening mowing blades | 30 | | | | | 30 | | Works to Skip Compound at CF | 30 | | | | | 30 | | Park Safety Improvements | 30 | | | | | 30 | | Bench projects funding | 20 | | | | | 20 | | **TOTAL:** | **6,020** | **1,946** | **1,501** | **1,308** | **1,230** | **12,005** |

#### FUNDED BY:

| Source Description | 2019/20 Proposed £'000 | 2020/21 Indicative £'000 | 2021/22 Indicative £'000 | 2022/23 Indicative £'000 | 2023/24 Indicative £'000 | TOTAL £'000 | |----------------------------------------------------------|-------------------------|---------------------------|---------------------------|---------------------------|---------------------------|-------------| | Capital Receipts | 1,930 | 529 | 347 | 60 | 30 | 2,896 | | Government Grants | 1,660 | 810 | 700 | 700 | 700 | 4,570 | | Other Grants and Contributions | 1,046 | 0 | 0 | 0 | 0 | 1,046 | | Section 106/CIL | 670 | 0 | 0 | 0 | 0 | 670 | | Reserves | 30 | 0 | 0 | 0 | 0 | 30 | | Borrowing | 684 | 607 | 454 | 548 | 500 | 2,793 | | **TOTAL:** | **6,020** | **1,946** | **1,501** | **1,308** | **1,230** | **12,005** |

#### CAPITAL RECEIPTS

| Source Description | 2019/20 £'000 | 2020/21 £'000 | 2021/22 £'000 | 2022/23 £'000 | 2023/24 £'000 | |----------------------------------------------------------|---------------|---------------|---------------|---------------|---------------| | Capital Resources at start of year: | 1,289 | 975 | 446 | 99 | 39 | | Available New Homes Bonus | 708 | 0 | 0 | 0 | 0 | | Capital Receipt from LAMS Scheme | 500 | 0 | 0 | 0 | 0 | | Approved transfer from Reserve | 340 | 0 | 0 | 0 | 0 | | Available for Capital Bids | 68 | 0 | 0 | 0 | 0 | | Used for Funding | -1,930 | -529 | -347 | -60 | -30 | | **Capital Resources at end of year:** | 975 | 446 | 99 | 39 | 9 |

## GENERAL FUND CAPITAL PROGRAMME 2019/20 TO 2023/24

### Provisionally approved Pending Capital Receipts:

| | 2019/20 Proposed £'000 | 2020/21 Indicative £'000 | 2021/22 Indicative £'000 | 2022/23 Indicative £'000 | 2023/24 Indicative £'000 | TOTAL £'000 | |----------------------|------------------------|---------------------------|---------------------------|---------------------------|---------------------------|-------------| | ICT | 0 | 0 | 67 | 145 | 0 | 212 | | Mayflower Pilgrims | 60 | 0 | 0 | 0 | 0 | 60 | | Middletons Match Funding | 400 | 0 | 0 | 0 | 0 | 400 | | Industrial units at Creative Village | 120 | 0 | 0 | 0 | 0 | 120 | | Canch Masterplan | 347 | 0 | 0 | 0 | 0 | 347 | | **Totals:** | **927** | **0** | **67** | **145** | **0** | **1,139** |

### CAPITAL RECEIPTS

| | 2019/20 £'000 | 2020/21 £'000 | 2021/22 £'000 | 2022/23 £'000 | 2023/24 £'000 | TOTAL £'000 | |----------------------|--------------|--------------|--------------|--------------|--------------|-------------| | Pending Capital Receipts | 927 | 0 | 67 | 145 | 0 | 1,139 | | Used for Funding | -927 | 0 | -67 | -145 | 0 | -1,139 | | Capital Receipts at end of year: | 0 | 0 | 0 | 0 | 0 | 0 |

1. **Public Interest Test**

1.1 The author of this report, Dave Hill, has determined that the report is not confidential.

2. **Purpose of the Report**

2.1 To consider and approve the Housing Capital Programme for 2019/20 to 2023/24.

3. **Background and Discussion**

3.1 As part of the arrangements for the new HRA self-financing regime, the Council prepared a 30 year Business Plan which identified the levels of capital expenditure required to maintain council housing stock at the ‘Decent Homes’ standard prescribed by central government into future years.

3.2 The capital programme for 2019/20 to 2023/24 continues with the four major elements of:

- Decent Homes;
- Fuel Poverty;
- Crime & Disorder;
- Disability.

3.3 From 2017/18, the HRA Business Plan has been fully developed into a ‘live’ model that is updated on a continuous basis to reflect any changes that materialise. The commitment made in the original Business Plan regarding the first five years of the capital programme remains in place, with later years being added and revised according to latest information. This is important as 2013/14 heralded the end of the Decent Homes funding and this programme now looks at wider agendas and is therefore more balanced and diverse. Major Improvements

3.4 In considering the schemes and the funding available, the first task is to maintain the Decent Homes standard going forward. Appendix 1 shows that a total of £21.175m has been identified as a five-year commitment to maintain the housing stock at minimum decency levels.

Green Energy

3.5 One of the biggest risks to the financial stability of Bassetlaw’s tenants is their ability to pay energy bills with a level of household income that prevents them from being classed as ‘fuel poor’. The aim of this set of priorities in the capital programme is to minimise fuel poverty wherever possible, ensuring properties have good levels of insulation, A-rated boilers, solar PV, renewable energy and efficient well maintained heating schemes. The Council has set a target of 20% of stock to be on some form of renewable heating by 2020/21.

3.6 The Council has developed a sound tradition of pioneering air source and ground source heat pumps to properties that were previously dependent on expensive heating systems. Therefore, a number of schemes have been included in the 2019/20 – 2023/24 Capital Programme. The programme areas identified in Appendix 1 cumulate in an investment of £4.025m over the five years covered in this report, with £0.805m being recommended for 2019/20. Expenditure will be committed to external wall insulation to solid wall properties, boiler and heating replacements.

Decent Neighbourhoods

3.7 Other emerging priorities are anti-crime and community safety measures. The commitment to this is for £0.940m in 2019/20, with an outline total of £4.7m invested by the end of 2023/24.

3.8 This priority group of projects includes not just property protection, but also environmental protection to assist with community wide safety. Crime risk can be minimised in the home with ‘Secured by Design’ windows and doors, but it is often the community projects that reduce anti-social behaviour and crime. Community safety doesn’t however solely refer to crime but includes fire risk assessments, health protection from poor sanitation, waste management (2 or 3 bin systems for properties designed for only a single bin), Housing Health & Safety Rating System, safe car parking, putting footpaths into good repair and properties in a good state of structural repair.

3.9 Fire Risk Assessments have provided one of the most significant additional funding requirements over the last few years. This will have to remain one of the first priorities on the annual delivery programme.

Homes for Life

3.10 Commitments to meet Equality Act requirements for tenants living with a disability and further home adaptions are being put forward with some £0.540m in 2019/20, with a total of £2.7m by the end of 2023/24.

3.11 The main thrust of this area will be the requirement for the delivery of adaptions to council tenants (to mirror the Disabled Facilities Grant process for private sector residents). As part of this process, it is important Bassetlaw remains innovative and adopts initiatives designed to reduce accidents and prevent the decline in people’s health prematurely. This is where self-referral schemes are important. In addition, though this will always be a desire, the lifetime homes criteria (16 points relating to access in and around the home) should always be adopted wherever possible and schemes to improve some suitable properties would be beneficial. With new-build schemes, lifetime homes should always be criteria for consideration.

3.12 Any pressures in this area can be kept to a minimum through good asset management and by obtaining grants wherever possible and working with partner organisations such as United Living, energy companies and maximising tariff schemes to ensure any duplication is removed from processes. Ensuring procurement gives value contracts that deliver both the product, the service and specifications that ensure product delivery is maximised and repair obligations minimised. Relying on capital budgets without including the above will always leave Bassetlaw behind the times.

Other Schemes

3.13 The HRA capital programme includes details of other schemes as follows:

- **New Build Contribution** – a sum of £2.0m per year has been included within the programme for the period 2019/20 to 2023/24 to enable further options for new build to be considered.

- **Vehicle Fleet Replacement** – The Housing depot operate a varied fleet and some vehicles can expect a longer life than others can. A replacement programme has been included in the 30-year business plan based on a life of between six and seven years for each vehicle. The capital programme for the five years from 2019/20 includes £268k per annum for vehicle replacement.

- **Non Dwelling Assets (Community Centres, boiler houses, garages etc.)** - these have received very little capital investment over the last few years and the proposed programme allows for £0.100m per annum for the five years commencing 2019/20 for improvement work.

- **Contribution to Flood Prevention Schemes** – The Council is very proactive in developing new flood prevention schemes and an annual contribution from the HRA is made towards the overall costs of protecting the HRA properties. This is proposed at £50k per annum for the period 2019/20 to 2023/24.

- **Damp Proofing Works** – There is a need to inspect and provide damp proofing works to properties, and a sum of £0.100m per annum has been included in the five year programme.

- **Asbestos Encapsulation / Removal** - a proposed rolling programme of £0.100m per annum for the five years to identify areas at risk of deterioration and take the appropriate action.

- **Electrical Installation Condition Testing** – This is a health and safety issue and a sum of £0.250m per annum has been included in the five year programme to deliver this testing programme. • Planned Works – Many properties require additional works in excess of the decent homes standard and a budget of £0.200m per year to 2023/24 has been included for this purpose. A further £0.150 per year to 2023/24 has also been included for heating works at Conway Gardens.

• Other – Minor schemes such as the flats above shops, comprising replacement of external elements to improve weather resistance and lightning protection improvements to blocks of flats following fire risk assessments.

Funding

3.14 The Self Financing Regime for the Housing Revenue Account commenced in April 2012 and under it councils can self-finance capital investment. In addition to this, capital receipts from council house sales can also be used to finance capital expenditure and if there is enough flexibility, revenue contributions to capital can also be made to provide additional funding through the Major Repairs Reserve (MRR).

3.15 In summary, the Housing Capital Programme for 2019/20 totals £10.090m, which is to be funded by:

- £5.205m from the Major Repairs Reserve;
- £4.500m from Borrowing;
- £0.385m of capital receipts.

3.16 Members will note that the Major Repairs Reserve is funded from a combination of asset depreciation charges and other revenue contributions and this level of revenue contribution is significant to the coherence of the unfolding plan. It also emphasises the importance of the value for money savings within the Housing Revenue Account and the commitment required on rents to maintain the level of quality that tenants now expect and are demanding.

Capital Receipts and the Right to Buy Scheme

3.17 Under changes approved by Parliament in April 2012, local authorities were given the option of either transferring all Right to Buy receipts in excess of a government-set sales target back to central government, or to retain the receipt and reinvest in replacement homes.

3.18 Bassetlaw opted to retain the additional Right to Buy receipts and this means that the receipts:

a) Must be used for the provision of affordable rented homes; b) Will constitute no more than 30% of total investment in such homes (net of any contribution from another public body); c) If they have not been used after three years, the Council will pay the unused sums, plus interest, back to the Secretary of State.

3.19 As part of the introduction of the self-financing scheme, the government set Bassetlaw a Right-to-Buy sales target of circa 18 properties for 2019/20. This means that Bassetlaw will only retain 100% of the capital receipt from property sales in excess of this figure. In the interests of prudence, no retained right to buy receipts have been included within the updated business plan. 3.20 However, the 30 year Business Plan does include an assumption of £0.385m of Right to Buy receipts being generated in each financial year. This amount of receipts being generated is kept under review during the financial year.

**Affordability**

3.21 The updated HRA Business Plan provides the assumptions for the Council’s loan financing profile over the next thirty years. For information, the scheduled long-term debt repayments that are built into the Business Plan over the next 10 years amount to £25m and are itemised below:

- 2019/20 - £3.3m
- 2022/23 - £4.1m
- 2023/24 - £3.3m
- 2026/27 - £5.5m
- 2027/28 - £3.3m
- 2028/29 - £5.5m

3.22 The Council’s overall Borrowing limit was set at £105.436m as part of the 2012 Settlement. In October 2018, the Prime Minister announced a policy change of abolition of the HRA Debt cap. The Chancellor announced in the Budget that the applicable date was 29 October 2018.

3.23 The current position regarding the HRA debt is shown in the table below. The opening debt position of £89.05m reflects the repayment of £6.5m during 2018/19.

| | 2019/20 | 2020/21 | 2021/22 | 2022/23 | 2023/24 | |----------------------|---------|---------|---------|---------|---------| | Existing HRA Long Term Debt @ 1st April | -89.050 | -90.277 | -91.877 | -93.177 | -94.086 | | Internal Borrowing | 0.000 | -1.600 | -1.300 | 0.000 | 0.000 | | Additional Borrowing | -4.500 | 0.000 | 0.000 | -5.000 | -3.800 | | **Plus:** | | | | | | | Scheduled Debt Repayments in year | 3.273 | 0.000 | 0.000 | 4.091 | 3.273 | | **HRA Long Term Debt at year end** | -90.277 | -91.877 | -93.177 | -94.086 | -94.613 |

3.24 As the above figures show, with the cessation of the Decent Homes programme there is a direct impact on the decisions made on:

(i) the level of capital investment; (ii) the pace of that investment; (iii) the levels of rent that tenants will be asked to pay for the quality of homes they live in.

3.25 Considerations need to be made about the pace of investment and improvement. If an ambitious and proactive approach is taken in future years then overspends will occur in the revenue account which will take it below the approved minimum working balance of £1.3m.

3.27 The six maturing loans as outlined above will be repaid in the appropriate year payable. However, due to the prescribed 1% cut in rents in 2019/20 it has removed the previously expected flexibility within the HRA Business Plan from 2017/18. This is because there is now a need to re-borrow similar amounts to those repaid to keep the business plan a viable option over the next five years.

4. **Implications**

a) For service users.

Considered in tandem with the *Housing Revenue Account Budget 2019/20 & Future Years to 2021/22* report, the link between capital decisions on investment and the revenue account is self-evident, as is the relationship between income (rents) and expenditure (improvements and repairs). Members need to decide if they wish to pace the level of improvements or make immediate commitments to the programme submitted on the priority areas put forward.

b) Strategic & Policy.

There are a number of programme areas that are/will emerge as part of the post Decent Homes era and from within the Council Plan for Bassetlaw. These are outlined in the report.

c) Financial Ref: 19/186

Until the Chancellor’s Budget speech in July 2015, the business plan was based on a fair split between capital investment in old and new housing stock, and the repayment of long-term debt.

The Chancellor’s announcement regarding a 1% rent reduction each year for four years has effectively meant a 3% swing (as the business plan projected a 2% increase in rent each year). This has significantly impacted on the business plan in that £30.2m of rent has been lost as result of this decision over the next ten year period.

Ultimately, this decision has forced some difficult decisions to be made, resulting in the commitment to the capital programme being maintained, with the consequence of the repayment of debt being deferred to later years.

d) Legal Ref: 207/01/2019

The Council needs to ensure compliance with the Equality Act 2010 and the appropriate levels of decency for its properties.

e) Human Resources - None arising directly from this report.

f) Community Safety, Equalities, Environmental

The programme has been developed through tenant consultation. Ensuring the suitability of property for disabled users has been reflected in the scheme’s priorities.

g) G.D.P.R – None arising directly from this report

h) This is key decision number 724 5. **Options, Risks and Reasons for Recommendations**

5.1 Members can decide what schemes to include or exclude, and the timing of those commitments. The summary provided under the section ‘Affordability’ sets out the full situation. In coming to a view on what priorities Members want to establish, consideration must be given to the impact that long-term borrowing has on the affordability within the Housing Revenue Account.

6. **Conclusions**

6.1 The year 2013/14 saw the end of government funding for the Decent Homes programme, but for Bassetlaw, the legacy and further commitment to the programme will be ongoing.

6.2 The Council will always need some room for manoeuvre and for this reason only full approval for the 2019/20 proposed programme is being sought at this stage. Following years’ capital programmes are therefore only being approved on an indicative basis and will be confirmed in succeeding financial years.

6.3 The government-prescribed reduction in rent has had a significant detrimental impact on the sustainability of the HRA Business Plan and caution should be exercised when considering any more proposals for new build in the medium term up to 2020.

7. **Recommendations**

7.1 That Members approve the 2019/20 proposed programme set out in Appendix 1 of the report.

7.2 That Members approve the indicative programmes for 2020/21 to 2023/24 in Appendix 1 of the report.

7.3 That Cabinet recommends the report to the Extraordinary Council meeting for approval on 31 January 2019.

| Background Papers | Location | |------------------------------------|-------------------------------| | HRA Housing Capital Schemes | Head of Finance & Property’s | | HRA Self Financing data | office |

## Appendix 1

### HOUSING REVENUE ACCOUNT CAPITAL PROGRAMME 2019/20 to 2023/24

| | 2019/20 | 2020/21 | 2021/22 | 2022/23 | 2023/24 | TOTAL | |----------------------|---------|---------|---------|---------|---------|-------| | | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | | **Proposed** | | | | | | | | **Indicative** | | | | | | | | **TOTAL** | | | | | | |

### MAJOR IMPROVEMENTS

- **Maintaining the Decent Homes standard**: £21,175
- **External Wall Insulation to Solid Wall Properties**: £1,550
- **Boiler and Heating Replacements**: £2,475

### GREEN ENERGY

- **External Wall Insulation to Solid Wall Properties**: £1,550
- **Boiler and Heating Replacements**: £2,475

### DECENT NEIGHBOURHOODS

- **Fire Protection to Blocks of Flats with Communal Areas, including compartmentation work and sheltered accommodation**: £2,000
- **Structural Repairs**: £550
- **Waste Storage Facilities - Communal Areas and Dwellings**: £250
- **Smoke and Heat Detection**: £500
- **Repairs to Un-adopted Roads and Paths**: £400

### HOMES FOR LIFE

- **Adaptations - from OT Referrals**: £2,500
- **Lifetime Homes Works - Disability Access**: £200

### OTHER SCHEMES

- **Abbey Grove**: £600
- **New Build Schemes - Airey Houses/Beverly Rd/Amanda Rd**: £10,000
- **Vehicle Fleet Replacement**: £1,340
- **Non Dwelling Assets (Community Centres, Boiler Houses, Garages etc)**: £1,340
- **Contribution to Flood Prevention Schemes**: £250
- **Damp Proofing Works**: £500
- **Asbestos Encapsulation / Removal**: £500
- **Electrical Installation Condition Testing and Rewires**: £1,250
- **Flats above shops**: £300
- **Lightning Protection**: £200
- **Planned Works**: £1,000
- **Legionella surveys and remedial works**: £250
- **Conway Gardens Individual Heatings to Flats**: £750
- **Electrical compliance to 10 blocks of flats**: £135
- **Exchange Street - new lift**: £0
- **Demolition of Styrrup Road / Common Lane**: £0
- **Furnival Street Demolition & Assoc. Works**: £0
- **Ashford Court Demolition & Carpark**: £0
- **Conway or Larwood replacement Lift**: £275

### TOTAL EXPENDITURE

- **2019/20**: £10,090
- **2020/21**: £10,090
- **2021/22**: £10,090
- **2022/23**: £10,090
- **2023/24**: £10,090
- **TOTAL**: £50,450

### Funded By:

| | 2019/20 | 2020/21 | 2021/22 | 2022/23 | 2023/24 | TOTAL | |----------------------|---------|---------|---------|---------|---------|-------| | | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | | **Proposed** | | | | | | | | **Indicative** | | | | | | | | **TOTAL** | | | | | | |

- **Major Repairs Reserve**: £32,325
- **External Funding**: £0
- **New Build Reserve**: £0
- **Unsupported / Internal Borrowing**: £16,200
- **Capital Receipts**: £1,925

### TOTAL FUNDING:

- **2019/20**: £10,090
- **2020/21**: £10,090
- **2021/22**: £10,090
- **2022/23**: £10,090
- **2023/24**: £10,090
- **TOTAL**: £50,450

1. **Public Interest Test**

1.1 The author of this report, David Hill, has determined that the report is not confidential.

2. **Purpose of the Report**

2.1 To consider and approve the Housing Revenue Account budget for 2019/20 and provide indicative figures for 2020/21 and 2021/22.

2.2 To make recommendations to Extraordinary Council on the 31 January 2019 to set the budget and rent levels for 2018/19.

3. **Background and Discussion**

3.1 Unlike the General Fund that comprises a range of different services, the Housing Revenue Account is a single service account which is funded by tenants’ rent income for the social housing and the landlord functions Bassetlaw provides via the Arm’s Length Management Organisation, A1 Housing. Therefore, all decisions on income and expenditure will have a direct impact on tenants’ service levels and the level of investment in their homes.

3.2 This has been re-enforced by the new ‘Self Financing Regime for Housing’ which became effective in April 2012. This means that expenditure now has to be entirely supported from rental and other income. The main tool for the future financial management of the HRA is the 30-year Business Plan.

3.3 The introduction of HRA self-financing did not end the requirement to maintain a statutory ring-fenced HRA, and the Council is still required to maintain a separate account for the income received and expenditure incurred on council housing.

**The 2019/20 HRA Revenue Budget**

3.4 The Housing Revenue Account is shown at Appendix 1. Due to the changes made under self-financing, any favourable variance from the expected out-turn in year is now transferred to the New Build Reserve. This decision can, of course, be changed if the 2018/19 outturn is significantly different to the planned budgets. 3.5 Under the old housing subsidy system, the government gave a Major Repairs Allowance (MRA) which was used to fund capital expenditure. Within the government’s self-financing settlement figures released in March 2012, this government guidance was followed for the required 5 years which finished in 2016/17. Depreciation represents a cash charge to the HRA which is required to be transferred to the Major Repairs Reserve (MRR) to provide for future capital expenditure and/or the repayment of debt. The level of depreciation chargeable to fund the capital programme is not sufficient to fund the capital programme and the repayment of debt, therefore a voluntary contribution of £1.5m is required during 2019/20.

3.6 The HRA outturn for 2018/19 is expected to deliver a £0.154m surplus in year, which is slightly higher than the original budget of £0.095m.

3.7 The estimated balances on the HRA and MRR are as follows:

| | HRA | MRR | |------------------------|------|------| | Balance at 1 April 2018| 1,669| 817 | | Surplus/(deficit) | 154 | | | MRA (made up of Depreciation & additional payment) | 6,376 | | | Voluntary revenue contribution for repayment of debt/capital expenditure | 2,500 | | | Housing Capital Expenditure | (8,396) | | | Repayment of Debt | | | | **Balance at 31 March 2019** | **1,823** | **1,298** | | Surplus/(deficit) | (135) | | | MRA (made up of Depreciation) | 6,375 | | | Voluntary revenue contribution for repayment of debt/capital expenditure | 1,500 | | | Housing Capital Expenditure | (5,205) | | | Repayment of Debt | | | | **Balance at 31 March 2020** | **1,688** | **695** |

**Balance Analysed Over:**

| | HRA | MRR | |------------------------|------|------| | Housing Revenue Expenditure | 1,688 | | | Housing Capital Expenditure | | 695 | | Repayment of Debt | | | | **Balance at 31 March 2019** | **1,688** | **695** |

**Rents**

3.8 As part of the Budget speech on 8th July 2015, the Chancellor announced that social housing rents will have to be cut by 1% each year for the next four years from April 2016. The last year will be 2019/20 and the indication is that the increase will then revert to CPI plus 1%. The rent reduction was aimed at ending ‘the ratchet of ever higher housing benefit chasing up ever higher rents in the social housing sector’. 3.9 The proposal is, therefore, to recommend a rent reduction for 2019/20 of 1.0% or an average of £0.63 per week. This is broken down by property types as follows:

| CHANGES BY PROPERTY TYPE | Bedsit | 1 Bed | 2 Bed | 3 Bed | 4+ Bed | 5+Bed | Overall | |--------------------------|--------|-------|-------|-------|--------|-------|---------| | £ | £ | £ | £ | £ | £ | £ | £ | | 2018/19 | 53.94 | 64.85 | 73.75 | 78.23 | 85.61 | 102.29| 72.86 | | 2019/20 | 53.40 | 64.20 | 73.01 | 77.45 | 84.75 | 101.27| 72.13 | | £ | (0.54) | (0.65)| (0.74)| (0.78)| (0.86) | (1.02)| (0.73) | | % | (1.00%)| (1.00%)| (1.01%)| (0.99%)| (1.00%)| (1.00%)| (0.96%) |

(Based on a 52 week rent year)

Note: The above table is based on average rental income from each type of property; the following items will affect the calculation of the percentage decrease in the above table:

- During the year the housing stock may be revalued which could affect the weekly rental charge.
- Changes in the housing stock through redevelopment or purchase of additional properties.
- All right to buys have the potential to affect the % decrease in the dwelling rental weekly charge.

3.10 Members should note that 2019/20 is a 53 week rent year (the first two days of the first week of the 2020/21 financial year sit in the 2019/20 rental year). In accordance with the Welfare Reform and Work Act 2016, rents for 2019/20 (the final year of the 4 year rent reduction covered in this legislation) must be set at no more than 99% of the previous year’s rent (2018/19). The 53rd week in 2019/20 will mean that tenants will pay 100.9% of the 2018/19 rent if no action is taken. Therefore, to address this in 2019/20 the Housing Revenue Account has been adjusted to account for rental income on a daily basis (366 days). This adjustment is needed only for one year, as rents will increase from 2020/21 onwards. This means that the rental income that relates to the 2020/21 financial year (3 days 1st, 2nd and 3rd April 2020) will sit in the 2020/21 accounts and tenants will therefore pay 99% of the rents from 2018/19. This is purely an accounting practice and will not affect how much tenants pay or when the pay.

3.11 This approach is one that is suggested by the LGA. MHCLG are aware of the position and that it affects all social landlords. They have indicated to the LGA that it is for landlords to satisfy themselves of the application of the Welfare Reform and Work Act 2016, but have also established a Working Party to consider this.

3.12 The Chancellor has announced that from 2020/21 rent may be increased by up to CPI + 1%. At current rates this equates to around a 3.2% increase shown in the table below:

| Average increase 2020/21 | Average increase 2021/22 | |--------------------------|--------------------------| | Per Week £ | % | Per Week £ | % | | 2.31 | 3.2% | 2.37 | 3.2% |

(Based on a 52 week rent year) 3.13 Whilst there may be some concerns nationally about the level of rents, approximately 57% of tenants get assistance through the Housing Benefit scheme, and 67% of those on HB (38% of all tenants) receive a full rebate and pay nothing. Housing Benefit is met by a charge to the General Fund, and in turn, this is met by a grant from the MHCLG currently covering 99.4% of the actual costs.

**Repairs & Maintenance**

3.14 The amount of money spent on responsive repairs is estimated at £6.9m for 2019/20, compared to £10m for planned maintenance in the HRA’s capital budget. This balance is deemed to be sound compared to the standard split of 40% responsive and 60% for planned repair expenditure.

**Depreciation**

3.15 Under the previous HRA regime depreciation (the annual charges made to reflect historic assets and improvements) was an in/out adjustment which made no difference to the overall level of HRA resources. Under the Self Financing regime these calculations are more important as all depreciation adjustments are in effect ‘real’ cash set aside for investment, and then used up once the asset or improvement they originally financed needs to be replaced. The 2018/19 budget for depreciation is £6.3m, and this is transferred into the Major Repairs Reserve to fund future capital expenditure.

**Value For Money and the Housing Revenue Account**

3.16 All elements of the HRA budget and business plan are subject to review in relation to value for money. In addition, the impact of any General fund Budget Review savings and service reviews will achieve reductions in costs for the Housing Revenue Account, thus releasing additional resources for the housing stock.

3.17 There are no specific savings targets for Housing moving forward in the Business Plan. Budgets previously controlled by A1 Housing through the Management Fee have been brought back in house and are summarised in Appendix A.

3.18 The following budget assumptions have been used to produce the draft Housing Revenue Account:

- Pay Award – Actual agreed increases have been included averaging 2.05% for 2018/19. From 2020/21 2% has been included for each year.
- Contracts – Where contracts have specific provision for inflationary increases these have been included at CPI (2.2%) or RPI (3.3%)
- BDC SLA’s – This is primarily based on recharges of staff time, therefore increases have been linked to the assumed pay increase each year.
- Rental Income has been increased by CPI + 1% from 2020/21 after the 4 year 1% reduction has finished.

**Provision for Bad debts**

3.19 Changes to welfare reform, including the ‘bedroom tax’ for under occupancy, the introduction of the Local Council Tax Reduction Scheme and the roll-out of Universal Credit all have the potential to increase the level of debts outstanding for council house rents. It is therefore prudent that the Council takes measures to mitigate the financial impacts of these changes. These include an annual bad debt provision of £150,000, and the welfare reform initiatives as identified above.

**Treasury Management**

3.20 As part of the self-financing arrangements, Bassetlaw inherited £26.9m of the national housing debt in March 2012, which increased its overall HRA debt level to £96.5m. This debt has been reduced over the last 5 years by £6m as at the 31st March 2018 the debt stood at £89.05m Overall this has an average debt interest rate of 3.88% and these figures are reflected in the budget profiles. This level of debt and average interest rate will fluctuate over time as existing loans mature and decisions are made as to whether to replace or pay off debt in the longer term.

3.21 As part of this transfer of debt, the government set Bassetlaw an overall HRA borrowing limit of £105.4m. Although this limit has been removed the Council is taking a very prudent approach to this as for every additional £1m in borrowing, the cost to the HRA budget will be approximately £40,000 per annum. If Members wish to utilise this borrowing ‘gap’ for further investment in our housing stock, or to self-build, the affordability of the revenue budget will always be the deciding factor.

3.22 The updated HRA Business Plan provides the assumptions for the Council’s loan financing profile over the next thirty years. For information, the scheduled long term debt repayments and associated reductions in interest costs that are built into the Business Plan over the next 10 years are:

- 2019/20 - £3.3m
- 2022/23 - £4.1m
- 2023/24 - £3.3m
- 2026/27 - £5.5m
- 2027/28 - £3.3m
- 2028/29 - £5.5m

3.23 Due to the introduction of 1% rent reductions each year for four years, re-borrowing will be necessary to retain the Council’s current levels of capital investment, and for this reason further borrowing has been built into the HRA Business Plan as follows:

- 2019/20 - £4.5m
- 2022/23 - £5.0m
- 2023/24 - £4.0m

3.24 The *Treasury Management Strategy 2019/20 to 2021/22* will be reported to Cabinet in February 2019 and will detail the borrowing requirements of the Housing Revenue Account. To ensure the stability of the HRA, its debt portfolio is long-term fixed rate borrowings. Therefore, for the purposes of Treasury Management, any additional borrowing requirement will be facilitated through similar fixed term loans.

**Reserves**

3.25 Due to the uncertainty around the new self-financing arrangements, the level of recommended minimum balances for the Housing Revenue Account was increased to £1.3m in April 2013. There are a number of benchmarks that are used for Housing authorities to determine the correct level as follows: | £000 | £200 per property (Housing Finance Act 1989 recommended based on 6,739 properties) | 1,348 | |------|---------------------------------------------------------------------------------|-------| | | 5% of dwelling rental income | 1,282 | | | 5% of gross expenditure (excl. transfers to MRR) | 1,289 | | | Average of the 3 options | 1,306 |

3.26 As the results of the three options are wide-ranging, it would be prudent to keep the minimum working balance under review each year. However, for 2019/20, it is recommended that the Council retains the minimum working balance at £1.3m.

3.27 This prudent approach reflects the level of uncertainties arising from welfare reform and the potential for tenants to accrue significant debts under these changes. In addition, the major work programmes planned under the Housing capital programme will require some properties to be held void, which reduces rent income levels. Reserves should not be used to mitigate rent levels as this would only be effective in the short term.

4. **Implications**

a) For service users.

Bassetlaw provides 6,739 homes for its residents, and this is makes up 14% of the number of homes in the district. Significant resources have been spent on improving the condition of the housing stock.

b) Strategic & Policy.

Decisions about the long term financial health of Bassetlaw’s council housing are now local ones, and Members now have a lot more influence over more significant matters of choice than previously. Long term decisions about quality and rent income are more pronounced, as is the long term financial stability of Bassetlaw’s HRA. With the end of the Decent Homes programme, Members need to consider what improvements they wish to make to the Council’s housing service, but this needs to be affordable both in the short and long term.

If Members wish to be positive about the improvements that can be made then they need to generate the income to pay for them, and this will influence the Council’s rent policies. As with anything else, improvements need to be funded accordingly.

c) Finance – 19/429

These are set out in the report. The recommended rent decrease is based on the government’s set parameters of a 1% rent reduction, and this has removed a significant amount from the HRA Business Plan. This has necessitated the modelling of £25m of further long term borrowing going forward to keep the Business Plan sustainable. This means that any further investment over and above that planned needs to be considered very carefully for its impact on the viability of the Housing Revenue Account. d) Legal – 298/01/2019

These are set out in the report.

e) Human Resources.

There are none arising from the report.

f) Community Safety, Equalities, Environmental.

The Council must ensure that decisions are made in such a way as to minimise unfairness and ensure that there is not a disproportionate effect on any protected group as defined in Equalities legislation. Recommendations to increase/decrease rent levels do not directly discriminate any particularly group as they apply across all tenants. Bassetlaw District Council provides financial and welfare advice and work with voluntary sector partners to ensure tenants can receive advice and support.

g) G.D.P.R. – None arising directly from this report

h) This is Key Decision number 725.

5. **Options, Risks and Reasons for Recommendations**

5.1 The Council needs to set a balanced budget for its HRA services with income equalling expenditure, and ensure that the Housing Revenue Account remains solvent, with the adequate reserves of a “going concern”.

5.2 This budget sets out the approach to maintain levels of quality and investment, and comply with the borrowing limit. The rent reduction of 1.0% could be lowered even further, but this will impact on the levels of investment in this and successive financial years.

5.3 The Budget assumptions are based on the HRA Business Plan. The associated risks include any variances in estimates for inflation, interest rates, volume of voids, and the number of Right to Buy sales.

5.4 The viability of the Business Plan is based on the management of debt levels coupled with investment in the Council’s existing and new stock. In reality the Business Plan needs to be flexible enough to cope with changes to this strategy over time.

6. **Conclusions**

6.1 The Council has a self-sufficient HRA, in which income from tenants is used to pay for the delivery of services to tenants and investment in the housing stock. The transition to self-financing represents a key shift in risks, with the Council taking full responsibility for managing and maintaining its own housing stock in return for access to all of its revenue income.

6.2 For these reasons the budget has been framed to minimise any risks identified. Members have a clear set of recommendations to support a soundly financed housing service as the 2019/20 budget will set the foundation for the next 30 years of council house funding in Bassetlaw.

7. **Recommendations**

7.1 That Members approve the Housing Revenue Account budget set out in Appendix 1 of the report for 2019/20.

7.2 That Members approve the indicative Housing Revenue Account budgets set out in Appendix 1 of the report for 2020/21 and 2021/22.

7.3 That Members approve an average rent reduction of 1.0% for 2019/20 in accordance with government policy.

7.4 That Members, in accordance with best practice note the flexibility to increase rents from 2020/21 onwards.

7.5 That Members approve the minimum level of HRA reserves to remain at £1.3m in recognition of the overall funding value of the HRA.

7.6 That Cabinet recommends this report to the Extraordinary Council meeting for approval on 31st January 2019.

**Background Papers:**

- Self-Financing Data
- HRA Budget Papers

**Location:**

Head of Finance & Property’s office

### Housing Revenue Account - Budget Forecast 2019-2022

#### APPENDIX 1

| BUDGET 2019/20 | Employees £ | Premises £ | Transport £ | Supplies and Services £ | Third Party Payments £ | Internal Services Recharged £ | Capital Charges £ | GROSS EXPEND £ | INCOME £ | NET EXPEND 2019/20 £ | ESTIMATE 2020/21 £ | ESTIMATE 2021/22 £ | ESTIMATE 2022/23 £ | ESTIMATE 2023/24 £ | |----------------|-------------|------------|-------------|-------------------------|------------------------|-----------------------------|-----------------|----------------|---------|----------------------|----------------|----------------|----------------|----------------| | **Management Fee** | | | | | | | | | | | | | | | | Rent Rates & Taxes | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | | Supervision and Management | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | | Repairs & Maintenance | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | | **Total Management Fee** | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |

#### Council Managed HRA Budgets

| | | | | | | | | | | | | | | | | **Expenditure** | | | | | | | | | | | | | | | | Repairs & Maintenance | 2,084,000 | 1,090,000 | 143,500 | 1,034,800 | 2,557,500 | 6,310,400 | 6,910,400 | 6,355,500 | 6,396,000 | 7,036,200 | 7,080,000 | 0 | 0 | 0 | | Supervision and Management | 1,962,400 | 30,000 | 72,000 | 579,900 | 94,400 | 3,547,100 | 6,281,800 | 6,281,800 | 6,392,700 | 6,504,400 | 6,613,500 | 6,724,700 | 0 | 0 | | Special Services | 699,700 | 436,000 | 39,400 | 276,400 | 129,000 | 1,589,100 | 1,589,100 | 1,694,000 | 1,618,000 | 1,832,200 | 1,946,100 | 0 | 0 | 0 | | Rent Rates & Taxes | 255,500 | 255,500 | 255,500 | 255,500 | 255,500 | 255,500 | 255,500 | 255,500 | 255,500 | 255,500 | 255,500 | 0 | 0 | 0 | | Rates Expenditure | 50,000 | 50,000 | 50,000 | 50,000 | 50,000 | 50,000 | 50,000 | 50,000 | 50,000 | 50,000 | 50,000 | 0 | 0 | 0 | | **Total Income** | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | | **Surplus (-) or Deficit for the Year on Service** | 4,732,100 | 1,812,700 | 274,300 | 2,724,500 | 2,786,800 | 3,681,100 | 22,382,300 | 22,382,300 | 22,382,300 | 22,382,300 | 22,382,300 | 22,382,300 | 0 | 0 | | **Net Income/Costs for Service** | 4,732,100 | 1,812,700 | 274,300 | 2,724,500 | 2,786,800 | 3,681,100 | 22,382,300 | 22,382,300 | 22,382,300 | 22,382,300 | 22,382,300 | 22,382,300 | 0 | 0 |

#### Movement on HRA Balance

| | | | | | | | | | | | | | | | | **Charges for Depreciation and Impairment on non-current assets** | -5,946,700 | -5,946,700 | -5,946,700 | -5,946,700 | -5,946,700 | -5,946,700 | -5,946,700 | -5,946,700 | -5,946,700 | -5,946,700 | -5,946,700 | -5,946,700 | 0 | 0 | | **Revenue Expenditure Funded from Capital Under Statute** | -50,000 | -50,000 | -50,000 | -50,000 | -50,000 | -50,000 | -50,000 | -50,000 | -50,000 | -50,000 | -50,000 | -50,000 | 0 | 0 | | **Capital Expenditure Charged against the HRA** | 2,676,000 | -2,743,000 | -45,000 | -45,000 | -45,000 | -45,000 | -45,000 | -45,000 | -45,000 | -45,000 | -45,000 | -45,000 | 0 | 0 | | **Employers Contribution Payable to NCC Pension Fund and Retirement Benefits Payable Direct to Pensioners** | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | | **Transfer to Major Repairs Reserve** | 7,876,100 | 7,876,100 | 7,876,100 | 7,876,100 | 7,876,100 | 7,876,100 | 7,876,100 | 7,876,100 | 7,876,100 | 7,876,100 | 7,876,100 | 7,876,100 | 0 | 0 | | **Net Additional Amount Required by Statute** | 1,385,000 | 1,385,000 | 1,385,000 | 1,385,000 | 1,385,000 | 1,385,000 | 1,385,000 | 1,385,000 | 1,385,000 | 1,385,000 | 1,385,000 | 1,385,000 | 0 | 0 | | **Net (Increase) or Decrease in HRA Balance in Year** | 135,370 | -708,570 | -65,200 | -232,600 | -247,800 | -247,800 | -247,800 | -247,800 | -247,800 | -247,800 | -247,800 | -247,800 | 0 | 0 |

#### Balance carried forward @ 1 April 2019

| | | | | | | | | | | | | | | | | **Balance carried forward** | 1,823,709 | 1,823,709 | 1,823,709 | 1,823,709 | 1,823,709 | 1,823,709 | 1,823,709 | 1,823,709 | 1,823,709 | 1,823,709 | 1,823,709 | 1,823,709 | 0 | 0 |

1. **Public Interest Test**

1.1 The author of this report, Dave Hill, has determined that the report is not confidential.

2. **Purpose of the Report**

2.1 To make projections about the longer term financial position of the Council.

3. **Background and Discussion**

3.1 The Medium Term Financial Plan (MTFP) sets the financial strategic direction for the Council, and is regularly updated as it evolves and develops throughout the year, to form the framework for the Council’s financial planning. To ensure Members have a sound basis for planning and decision making, the MTFP will be updated at three key points in the year: These are:

- June – with the initial viewpoint of the upcoming financial year;
- December – an update to include additional information received at national level and corporate issues identified through service planning;
- February – with the final budget for the new financial year;

3.2 The purpose of the MTFP is to set out the key financial management principles, budget assumptions and service issues. It is then used as the framework for the detailed budget setting process to ensure that resources are effectively managed and are able to deliver the aspirations of the Council as set out in the Council Plan, over the medium term.

**Principles Underpinning the Budget Strategy**

3.3 The Council has a number of agreed principles as a basis for financial management and budget planning as follows:

- Emerging pressures are managed within existing overall budgets;
- Spending is aligned to key priorities as set out in the Council Plan; • Income is only included in the budget where supported by robust proposals and is deliverable; • Commercial income will be maximised where possible to ensure that fee charging services break-even over time and are provided with a nil cost subsidy from the taxpayer, or return a surplus where appropriate; • Where possible, future liabilities are anticipated; • Budgets are sustainable; • Savings proposals are supported by project plans and the impact on service delivery is clear; • Capital and revenue planning must be integrated to ensure implications are fully anticipated; • The Council’s reserves and balances are not to be used as a primary method to balance the ongoing pressures in the budget. Earmarked reserves are used for specific one-off purposes to support the delivery of corporate objectives and to mitigate risks.

3.4 The national Government deficit reduction strategy has resulted in significantly less funding being available to local government since June 2010. This means the continued need to reduce costs and increase income will remain a key part of the 2019/20 budget and this MTFP.

3.5 In light of the anticipated medium term gap, the Council has developed a forward strategy to inform future financial planning, by providing a framework for reducing planned expenditure over the medium term to ensure the Council is financially sustainable, while still delivering the Council’s key priorities as set out in the Council Plan.

3.6 To provide some certainty for the 4 years to 2019/20 the Council accepted the government’s offer of a multi-year settlement. A condition of the offer was the submission of an Efficiency Plan showing how we will deliver savings and efficiencies. This document was submitted in October 2016.

Budget Assumptions

3.7 Over the last year inflation has fallen. The Consumer Prices Index (CPI) annual inflation stood at 2.2% in October 2018 (compared to 2.8% in October 2017). The Retail Prices Index (RPI) annual inflation was 3.3% in October 2018 (compared to 4.0% in October 2017). These have been factored into the projections on Appendix 1 of the report, with future inflationary pressures set out for future years.

3.8 The following budget assumptions have been built into the forecast:

• Pay award – A pay award averaging 2.05% for 2019/20 and 2% thereafter; • Contracts have been linked to the CPI/RPI as per individual agreements; • Fees and charges have, in the main, been linked to the CPI annual average of 2.2% rounded up to 3%; • Other expenditure has not had any inflationary factor applied;

4. Resources Available

4.1 On 29th October 2018, the Chancellor announced the Autumn Statement. This identifies the government intentions for public spending for 2019/20 ahead of the Spending Review in 2019. The MTFP report to Cabinet in September outlined the uncertainty facing local government from 2020/21 onwards. This uncertainty remains and very little additional information has been released since September.

**Local Government Financial Settlement 2019/20**

4.2 Based on the information provided in the provisional Local Government Finance Settlement 2019/20 announced on December 13th 2018 and national spending announcements, the following estimated funding will be available over the medium term:

| | 2019/20 £m | 2020/21 £m | 2021/22 £m | 2022/23 £m | 2023/24 £m | |----------------------|------------|------------|------------|------------|------------| | Revenue Support Grant| 0.23 | 0 | 0 | 0 | 0 | | Retained Business Rates (including S31 Grant) | 16.59 | 15.55 | 15.89 | 16.24 | 16.60 | | Government Tariff | (12.60) | (11.34) | (11.68) | (12.03) | (12.39) | | Total Government Funding | 4.22 | 4.21 | 4.21 | 4.21 | 4.21 | | Reduction in Government Funding | 0.42 | 0 | 0 | 0 | 0 | | Percentage Reduction (%) | 9.1% | 0% | 0% | 0% | 0% |

4.3 2019/20 is the last year of the 4 year Local Government Finance Settlement where we have some certainty on the funding. The 2020/21 funding figures will not be available until the completion of the Fair Funding Review and the picture regarding the 75% Business Rates Retention becomes clearer. Therefore, the figures from 2020/21 onwards are the best estimates given the information available and assume 75% Business Rates retention with a 50/50 tier split.

**Revenue Support Grant**

4.4 The Council is estimated to receive £0.23m in RSG in 2019/20, which is a reduction of £0.51m from 2018/19 (70%). This grant has been retained to allow the Government to continue to reduce funding to local government in line with the national funding totals.

4.5 The formula underpinning the Revenue Support Grant is expected to remain constant until the Business Rates Baseline is reset i.e. it is adjusted for growth/loss of business income. This means changes in factors such as population growth will not be taken into account in the local resources received. The RSG will reduce to zero in 2020/21.

**Retained Business Rates**

4.6 The changes under the ‘Localisation of Business Rates’ now means that local authorities are incentivised to promote economic growth in their area. From 1st April 2013, local authorities can retain a share of the net income that they receive in Business Rates as funding to meet the costs of service provision.

4.7 In total, Bassetlaw retains 40% of Business Rates collected during the year, after deductions for mandatory and discretionary reliefs, the cost of income collections, including losses, and for the cost of changes to rateable values as a result of appeals. The remaining amounts are paid on the basis of: 50% to central government, 9% to Nottinghamshire County Council, and 1% to Nottinghamshire Fire & Rescue Authority.

4.8 Bassetlaw’s Retained Business Rates income (i.e. the 40%) is then subject to a tariff, annually increased by the Retail Price Index (RPI), which is paid to central Government. This equates to the amount of Business Rates collected which is in excess of what we need. This tariff payment funds other local authorities where their Business Rates are considered to be disproportionately low. The level of tariff is unique to each local authority.

4.9 From 1st April 2013, all of the seven Nottinghamshire District Councils joined forces with Nottinghamshire County Council to form a Business Rates Pool. This works in exactly the same manner as for an individual authority, but has the added financial advantage of a greater level of resources being retained within the County for reinvestment or distribution to partner authorities. This is because 50% of the growth experienced by each of the District Councils would, singularly, have been transferred to Central Government via the levy mechanism if the Pool was not in place. Instead it is retained within the Pool membership and distributed accordingly.

4.10 The City of Nottingham and Nottinghamshire Economic Prosperity Committee on 24th July 2015 agreed that 50% of the Pool surplus generated in 2014/15 and future years, net of retention for the volatility fund, would be re-distributed back to Pool members. For Bassetlaw this has generated an additional £306,000 in 2017/18 that can be used towards setting a balance budget in future years. The MTFP will not include any such sums for future years until they have been formally agreed.

4.11 An additional complexity for local authorities when forecasting their retained Business Rate income is the Government’s announcement in March 2017 on a range of Business Rate measures to support businesses affected by the national revaluation exercise. These included:

- £1,000 relief for pubs;
- Supporting Small Business relief;
- Discretionary Rate Relief.

4.12 These measures were extended into 2018/19 and are expected to be applied in 2019/20. The Government confirmed that local authorities will be reimbursed through a grant (known as a Section 31 grant) for the lost Business Rate income, which forms part of their Retained Business Rate funding.

4.13 Including the Section 31 grant funded business rate measures, Bassetlaw will collect £43.0m in 2018/19 (after deductions for reliefs, bad debt provision, and set aside for potential loss on appeals), inclusive of annual business rate income growth.

4.14 There are a number of risks that could affect the level of Business Rate income collected, and as such, reduce the anticipated amount of Retained Business Rates. The most significant risks are as follows:

- Unpredictable increases in exemptions and reliefs due to different property usage;
- Successful business rate appeals dating back to earlier years;
- Slower than anticipated local economic growth;
- RPI increases on the tariff being higher than local economic growth;
- Uncollectable debts as a result of worsening economic conditions. 4.15 Bassetlaw is currently performing well by increasing the rateable value within the district. This is because of the growth that is being encouraged by the Council within the business sector, and the proactive work being undertaken by the additional property inspector in inspecting our business properties. Some additional growth above the government baseline is expected over the next 4 years although it is very difficult to forecast without knowing the potential effect of appeals.

4.16 The collection of Business Rates is being closely monitored throughout the year to inform future funding projections and on the basis of the current position it is expected that income will increase.

**New Homes Bonus**

4.17 The Government has established the New Homes Bonus, which is allocated to Councils on the basis of new homes built within the district, and on bringing empty homes back into use. It promoted the New Homes Bonus as a way to ensure that the economic benefits of growth are returned to the local authorities and communities where growth takes place – and so help engender a more positive attitude towards growth. In reality, this was just funded by a top-slice of the Revenue Support Grant and is not new money.

4.18 In December 2016 the government announced fundamental changes to New Homes Bonus funding, reducing the 6 year’s payment period to 4 years and introducing a threshold below which there is no payment. There have been no further changes in 2019/20. The estimated payments over the next 5 years are show below:

| Year | 2018/19 £’000 | 2019/20 £’000 | 2020/21 £’000 | 2021/22 £’000 | 2022/23 £’000 | 2023/24 £’000 | |--------|---------------|---------------|---------------|---------------|---------------|---------------| | 2015/16| 344 | | | | | | | 2016/17| 400 | 400 | | | | | | 2017/18| 189 | 189 | 189 | | | | | 2018/19| 115 | 115 | 115 | 115 | | | | 2019/20| 318 | 318 | 318 | 318 | 318 | | | 2020/21| | 250\* | 250\* | 250\* | 250\* | | | 2021/22| | 200\* | 200\* | 200\* | 200\* | | | 2022/23| | | 200\* | 200\* | 200\* | | | TOTAL | 1,048 | 1,022\*\* | 872 | 883 | 968 | 650 |

\*Note: Estimates only

\*\*Note: There is a one off adjustment in 2019/20 of £160k due to an error in a previous return. Actual grant received will be £862k.

4.19 Bassetlaw has utilised the New Homes Bonus between 2011/12 and 2018/19 as replacement core funding whilst delivering a measured savings programme each year. The future of the New Homes Bonus remains under review but nothing has yet been announced as to whether it will continue in its current form, phased out or scrapped in its entirety.

4.20 The budget from 2016/17 onwards was based on the utilisation of £0.75m of New Homes Bonus for mainstream funding, with the remaining grant income being earmarked for specific one-off purposes. 4.21 This was reduced to £0.25m in 2018/19 which will be the last year where New Homes Bonus is used for Revenue purposes. The money released by not including New Homes Bonus in the revenue budget will be earmarked for either specific one-off revenue projects, or utilised to fund the capital programme.

**Council Tax**

4.22 Under the current arrangements, if a Council increases its Council Tax above a certain level, there is a legislative requirement to hold a referendum. The referendum limit for 2018/19 was set at 3% or £5.

4.23 As part of its financial strategy, Bassetlaw set an increase of £5 in respect of 2018/19. For the purposes of this MTFP, as a basis for exemplifying the financial position only, it has been assumed that annual increases of £5 will apply each year from 2019/20 onwards. Failure to increase council tax for the duration of this MTFP will contribute to the overall decline of the Council’s financial capacity and Members’ ability to fulfil their service responsibilities.

4.24 Council Tax Benefit was a benefit for people on low income to help them to pay Council Tax, and it was paid to individuals by local authorities. The Government gave local authorities a grant to match the payments made to individuals. In April 2013 the Government reduced the funding available to Local Authorities and changed the mechanism for operating Council Tax Benefit, to a local decision known as a “Local Council Tax Reduction Scheme”.

4.25 The change from Council Tax Benefit to the Local Council Tax Reduction Scheme means rather than receiving a benefit to offset the cost of Council Tax, eligible residents now receive a discount at source direct from the bill, which reduces the Tax Base for all precepting authorities. The current value of council tax reduction discounts is estimated at £7.65m (Bassetlaw’s share is £0.81m). When converted to Band D equivalent properties this is a reduction of 3,927 properties to the 2018/19 Council Tax Base. The number of discounts will vary as claimant numbers change, but demand is continuing to be lower than was estimated when the 2018/19 tax base was set. This will continue to be closely monitored each year.

4.26 The calculation of the Council Tax Base for a given year, includes an assumption of the percentage of sums due which are actually collected. The changes to the Local Council Tax Reduction Scheme (LCTRS) and the impact of welfare reform means that it is prudent to keep the anticipated overall collection rate at 98.0% for 2019/20. The collection rate will continue to be closely monitored throughout the year.

4.27 The forecast growth in the Tax Base is based on housing growth assumptions and adjusted for a risk to potential service delivery. The current Tax Base growth is estimated at 563 Band D equivalent properties for 2019/20 and 1.25% growth for the following 4 years until 2023/24. This is offset by an assumed constant level of LCTR claimants at 3,927 Band D equivalent properties. The estimated Tax Base and the changes for LCTRS are currently estimated as follows: The estimated future growth is regularly reviewed to ensure it remains reasonable, and a prudent estimate is always used to ensure the Collection Fund remains balanced or in a surplus.

Bassetlaw’s anticipated income arising from a £5 council tax increase coupled with the increase in the Council Tax Base, is shown below:

| | 2019/20 | 2020/21 | 2021/22 | 2022/23 | 2023/24 | |----------------------|---------|---------|---------|---------|---------| | Forecast Taxbase | 34,795 | 35,230 | 35,670 | 36,116 | 35,568 | | Forecast Band D based on a £5 Council Tax Increase | £173.48 | £178.48 | £183.48 | £188.48 | £193.48 | | Council Tax Income – BDC only | £6.036m | £6.289m | £6.545m | £6.807m | £7.075m | | Percentage Increase (%) | 4.7% | 4.2% | 4.1% | 4.0% | 3.9% |

Collection Fund Surplus/Deficit

The Council is statutory obliged to prepare an estimate of its Collection Fund transactions for council tax on 15th January each year. This estimate enables Bassetlaw and the three major precepting authorities to take account of any surpluses or deficits on the Fund when they set their own authority budgets. It is therefore requested that this calculation on the 15th January 2019 and the declaration of the surplus or deficit be delegated to the Head of Finance and Property.

Specific Grants

The Council continues to receive a number of specific grants, although these have and will continue to reduce. These grants are in some cases “ring fenced” to individual activities, so spending is dictated along with the funding. Some specific grants are not ring-fenced which means that the Council can choose how funding is spent in accordance with local priorities (even where a grant was previously linked to a specific service or priority).

In 2018/19 the Council will receive £24.8m as earmarked revenue specific grant funding, although the bulk of this funding relates to the subsidy for housing benefit payments. The latest estimates going forward are as follows: | | 2018/19 £m | 2019/20 £m | 2020/21 £m | 2021/22 £m | 2022/23 £m | |--------------------------------|------------|------------|------------|------------|------------| | Rent Rebates (Council dwellings) | 12.464 | 10.095 | 8.176 | 6.622 | 5.364 | | Rent Allowances (Private Sector Dwellings) | 11.792 | 9.308 | 7.347 | 5.800 | 4.578 | | Housing Benefit Administration | 0.330 | 0.280 | 0.238 | 0.280 | 0.280 | | Business Rates Cost of Collection | 0.168 | 0.168 | 0.168 | 0.168 | 0.168 | | **TOTAL:** | **24.754** | **19.851** | **15.929** | **12.791** | **10.280** |

4.33 Universal Credit was extended for working-age claimants in Bassetlaw from December 2017. This change means an element of the housing benefit subsidy that Bassetlaw currently receives has been transferred to the DWP, leaving the Council with a smaller gross expenditure amount. This “reduction” in both new Housing Benefit claims and therefore subsidy has been included in the above figures from 2018/19 onwards when couples and family claims will transfer to Universal Credit. Although the government has announced there will be a full roll-out there is no timetable. Subsidy has, therefore, been reduced in-line with current actual migration levels. The DWP have not issued any plans to transfer pensioner claims away from local authorities for the foreseeable future, so Housing Benefit subsidy will still have to be paid to Bassetlaw for this. Other changes associated with this will be the inevitable reduction in Housing Benefit Administration Grant.

**Reserves and Balances**

4.34 When setting its Budget, the Council must have regard to the level of reserves needed to mitigate against both known and unknown risks and issues. A risk assessment of the General Fund Balances informs the Council’s Section 151 Officer’s view of the adequacy of reserves to provide assurance to the budget.

4.35 The minimum prudent level of reserves remains at £1.0m for 2018/19. Best practice guidance from CIPFA states that the General Fund balance may be between 5% and 100% of net expenditure. The Council’s £1.0m minimum working balance represents 6.1% of net expenditure.

4.36 In addition to the General Fund Balance, the Council retains a number of earmarked reserves on the balance sheet. Some are required to be held for statutory reasons, some are needed to comply with proper accounting practice, and others have been set up voluntarily to earmark resources for future spending plans or potential liabilities.

4.37 The Council has continued to develop its prudent financial management arrangements, through the development of earmarked reserves to mitigate against potential future risks. As issues arise, the potential requirement for an earmarked reserve is considered. New earmarked reserves are formally considered as part of the detailed budget process, to ensure that any new risks identified are adequately mitigated, and throughout the annual budget monitoring process as risks arise or become clearer.

4.38 The detailed budget process includes an assessment of risk, the adequacy of General Fund Reserves and a review of earmarked reserves, to both create and change earmarked reserve levels, and to also release reserves which are no longer required. | General Fund: | 1<sup>st</sup> April 2018 £’000 | Description and Intended Drawdown: | |--------------|-------------------------------|----------------------------------| | **Balances:** | | | | General Fund Balance | 2,504 | General balances to be utilised for unexpected events and other contingencies. No end date. | | **Usable Reserves:** | | | | Job Evaluation | 652 | Set aside to cover the one-off costs of Job Evaluation, and to meet downsizing and redundancy costs. To be utilised in 2019/20. | | Internal Insurance | 283 | Set aside from revenue as a self-insurance fund to reduce the annual costs of insurance premiums. No end date. | | Developers’ Contributions Unapplied | 72 | To be used for specific revenue purposes as part of Section 106 agreements. To be written down as part of the individual agreements. | | Revenue Grants & Contributions Unapplied | 432 | Grants unspent at the year end. | | General Fund Earmarked Reserve | 1,119 | Various earmarked reserves to support service requirements. A number are expected to be drawn down in 2018/19, whilst remainder expected to be drawdown over life of the MTFP. | | Business Rates Volatility | 599 | Set aside from revenue each year as an assurance against in year reductions in business rates. | | Retained Business Rates | 380 | The Business Rates Retention scheme was introduced in April 2013. The scheme allows Councils to retain their share of Business Rates income. However, the accounting arrangements for the scheme are complex and different income streams have to be accounted for under different legislative arrangements. This can lead to deficits or surpluses within General Fund. This reserve has been set up to help smooth these variances. | | Business rates Pooling | 872 | Bassetlaw is a member of the Nottinghamshire Pool for Retained Business Rates. This reserve represents the Councils share of redistributed growth generated from not paying over the individual Council levies to Central Government as a result of the pooling arrangements. | | New Homes Bonus | 590 | Reserve created to hold New Homes Bonus Grant received in year and allocated to revenue. | | Invest to Save Reserve | 1,000 | Money set aside to assist with the creating efficiencies and increase income generation potential. | | Local Plan | 167 | To be used to fund the costs of producing the next Local Plan. | Management Team Reserves 145 Various EM reserves to support Service requirements, as agreed by Management Team.

Other 302 Donations for Museum and Shopmobility £33k; Environmental Improvements £9k; LAMS £58k; ICT Developments £84k; Building asset Improvements £48k; Fair Value Movement £70k

TOTAL £6,613

4.39 One of the key underpinning financial principles of the MTFP is to not use the Council’s reserves (and other one-off resources) as a method to balance the ongoing pressures of the budget. However, over the years, Bassetlaw has made use of its reserves to deal with one-off unbudgeted matters: to improve services, or to offset declining income levels and support service delivery.

4.40 If the stage is ever reached where the Council has to generate more in-year cuts to deal with the costs of downsizing it will add further pressure to an already challenging situation, which is why this document, and more importantly the proactive work to be at least one year in advance of the problem, that goes into every budget, is so important.

4.41 Any situation which erodes this will be a serious matter for the Council’s External Auditors who expect Members to continue to run the Council as a viable going concern. This is particularly so now that Members have to, in effect, balance and manage two budgets – the mainstream revenue budget, and also since April 2013, the local council tax benefit scheme and the impact this has in the Collection Fund. As council tax benefits are no longer fully funded it adds to the complexity of Bassetlaw’s operations as a council tax collection authority.

5. Proposed Strategy to Bridge the Funding Gap

5.1 Appendix 1 shows that the Council has a forecast budget shortfall for the next five years of £1.3m, which is summarised below.

| Financial Year | Gross budget shortfall £m | Savings Identified £m | Net Budget Shortfall £m | |----------------|---------------------------|-----------------------|-------------------------| | 2019/20 | 1,170 | (1,080) | 90 | | 2020/21 | 1,900 | (649) | 1,251 | | 2021/22 | 730 | (648) | 82 | | 2022/23 | 530 | (615) | (85) | | 2023/24 | 310 | (330) | (20) | | TOTAL | 4,640 | (3,332) | 1,318 | 5.2 Over the last 10 years Bassetlaw has delivered savings of just over £8m and any new savings are becoming increasingly difficult to identify and deliver. It is essential that the Council continues to identify areas where costs can be reduced or income increased to close the budget gap.

5.3 A number of areas have been identified that will help to address the budgeted shortfall over the next 4 years and these are focussed around additional income and reducing expenditure as follows:

- **Additional Income:**

  - Potential Council Tax increases and growth in the taxbase
  - New Income streams

- **Reducing Expenditure:**

  - Treasury management savings
  - Improved procurement
  - Vacancy management
  - Zero base budget review
  - Service Reviews

These will be examined in more detail in the following paragraphs.

**Sources of Income**

5.4 During 2017/18 the Council has set up two new trading companies – the S80 partnership – a general trading company and Bersahill Developments Ltd, a company formed in partnership with a local building firm. It is expected that from 2019/20 these companies will provide the Council with an important income stream.

5.5 Further trading opportunities will be evaluated as they come forward. Bassetlaw DC is working with another Council with an established trading unit. This will help with assessing suitable trading opportunities, developing comprehensive business plans and monitoring trading activity.

**Other Reductions in Expenditure**

5.6 Treasury Management – Working with the Council’s Treasury advisors we will ensure that our Treasury Management Strategy allows for more innovative investment to improve our returns from investments. Re-scheduling long-term debt and adjusting MRP calculations remain under constant review.

5.7 Improved Procurement – During 2018/19 Nottinghamshire City Council agreed to provide the procurement service for Bassetlaw. The Cabinet report identified significant potential savings through more effective procurement. This will be closely monitored over the next year.

5.8 Zero Base Budgeting – This was introduced as a new concept to Bassetlaw in setting the 2015/16 budget. Service Managers were fully engaged with the process, and the exercise has been a useful tool in challenging, and consequently reducing levels of expenditure. It is proposed to continue this for the foreseeable future.

5.9 A1 Housing – From 1st October 2018, A1 Housing Ltd ceased trading and the company will be wound up in due course. The A1 staff were transferred to BDC and significant savings have been identified through, for example, removing the duplication of expenditure. Work is underway to identify further opportunities for savings and improved service delivery.

5.10 CCTV and Security – The CCTV control room relocated to Queen’s Buildings in 2013 and new state of the art digital equipment was purchased to kit-out the room. This gives a number of opportunities for selling the Council’s services to Parish/Town Councils and other organisations through the newly created S80 partnership company

Service Improvements

5.11 Growth - There are no assumptions about any revenue growth bids in the figures on Appendix 1. If there are any improvements that emerge and are linked to the Council Plan, the assumption is that they will be cost neutral or met from compensating savings from existing services, as Bassetlaw’s resource envelope will not be increasing. Therefore, Members will have to carefully consider the financial implications of any new service proposals.

5.12 Business Rate Debt – Property Inspector - The implementation of the National Non-Domestic Rate system in 1990, effectively removed any financial incentive for improving the business rate tax base from local authorities. Council’s are legally responsible for bringing matters to the attention of the Valuation Office. IRRV research, which showed that there are instances where:

- Some hereditaments are not included in the rating list;
- properties are under-assessed due to floor value or size of hereditament;
- newly-built and other properties are ready for completion, but with no completion notice being served.

5.13 The Property Inspector is in the process of physically inspecting over 3,500 businesses which is generating income for the Council. Through this work the rateable value of properties has been increased by over £4m. This provides a cash benefit to the authority.

6. Capital Investment Strategy

6.1 The Council has minimal resources available to fund future capital programmes and is very much reliant on the sale of surplus assets. However, the majority of surplus and undeveloped plots of land are under the ownership of the HRA, so resources for General Fund are restricted.

6.2 The Capital Investment Strategy has 2 aims: firstly, to ensure that schemes started in previous years are swiftly completed; and secondly, new schemes added to the capital programme will be appropriately managed to ensure that these are also successfully delivered within the designated financial year. Any new capital investment funded from borrowing will be carefully considered as part of a business case to ensure that borrowing costs are fully covered by new income stream or savings

7. Implications

a) For service users – the Council will face significant and ongoing financial pressure for the foreseeable future, and most certainly during the three years of this plan until the next General Election scheduled for 2020. b) Strategic & Policy

The scale of the withdrawal of Government funding is forcing all councils to do things differently and more innovatively to ensure they succeed in delivering services with less funding. The Financial Strategy Group will be considering different strategies to steer the authority towards achieving self-sufficiency over the coming years.

c) Finance: 19/611

These are set out in the report, and in more detail at Appendix 1.

d) Legal: 212/01/2019

The Council needs to ensure delivery of the Council’s strategic aims and objectives and adherence to the Council’s annual spending plans.

e) Human Resources – These are set out in the report.

f) Community Safety, Equalities, Environmental

This report sets out the overall context against which future decisions will have to be made. The equality and diversity issues will be subject to more detailed assessment by service managers as part of the development and implementation of their budget proposals.

g) G.D.P.R. – None arising directly from this report

h) This is Key Decision No. 726

8. Options, Risks and Reasons for Recommendations

8.1 Bassetlaw needs to review its Financial Strategy and Medium Term Financial Plan annually to ensure its projected expenditure is balanced with the income it receives, and where it doesn’t, or is projected not to, corrective action is identified. | Risk | Impact | Comments | |--------|--------|------------------------------------------------------------------------------------------------------------------------------------------| | Time | Medium | Bassetlaw has always aimed to be one year ahead of the budget reductions it needs to make, so that any changes required are as trouble free as possible. | | | | Savings have been identified to balance the 2019/20 budget through the work of the Financial Strategy Group and the other measures outlined in this report in the run up to the budget setting at Full Council on the 7th March 2019. | | | | Work is underway to find the shortfall projected for future years. This needs to be worked on in the next 12 months to ensure we are in a satisfactory position at the beginning of 2020/21 when there will be significant changes in local government funding. | | Viability | Medium | Bassetlaw is relatively well placed to deal with the next financial years and plans are in place to address the next 5 years although the uncertainty after 2020/21 is a significant worry. | | | | The continuation of the New Homes Bonus and the benefits of the Nottinghamshire NNDR Pool have provided significantly more income than expected and underline the importance of income generation as well as further expenditure cuts. | | Finance | Medium | It is important to consider all measures possible to help reduce the budget gap. Council tax increases play an important part offsetting the continual reductions in available budgets. The budget recommended for 2019/20 will include a range of measures to balance the budget: | | | | - potential council tax increases; | | | | - income maximisation measures; | | | | - service savings; | | | | The foundations for balancing future budgets are also being identified. | | Profile | High | Bassetlaw has cut £10m from its budget since 2007/08 and, faces further reductions of £1.3m over the life of this MTFP. | Adaptability | High | Working with partners will be essential to successfully respond to the challenges that face the Council. Local government is changing rapidly and a successful Council will be able to adapt and work with partners in both the private and public sectors.

9. **Conclusions**

9.1 The review of the MTFP has once again been undertaken against the backdrop of significant reductions and changes to funding, and the additional cost of service pressures, and a lot of uncertainty regarding future funding bringing with them the need to plan ahead for the future with far fewer resources.

9.2 The overall financial management strategy is concerned with all the things the Council needs to do to make Bassetlaw financially stable so that the Council can continue to deliver its overall strategy and thrive as a ‘Viable Co-operative Council’.

9.3 The 2019/20 budget will be balanced when presented to members in the new year allowing the Council to put in place plans to achieve a balanced budget over the following years. By planning for the medium to longer term, consideration can be given to further projects and commercial initiatives to encourage new income generation and development opportunities.

9.4 Membership of the Nottinghamshire business rates Pool has proved financially beneficial since its inception, and it remains important that the Council continues to retain a high proportion of the business rate income it generates.

9.5 Although the financial context is ever more challenging, the Council has a track record of identifying and delivering significant savings and for annual expenditure to be at, or slightly under, the agreed budget, all within a framework of effective financial planning. This approach will need to continue to ensure that a sustainable position can be maintained.

10. **Recommendations**

10.1 Cabinet is recommended to note the projections for the next five financial years as set out in Appendix 1.

10.2 Cabinet approve the Medium Term Financial Plan for 2019/20 – 2023/24 as set out in Appendix 1 of the report, as the framework for the next five years’ budgets.

10.3 Cabinet increase council tax as part of their 2019/20 budget preparations.

10.4 Cabinet delegate the calculation and declaration of the Council Tax deficit or surplus for the 2019/20 budget on the 15th January 2019 to the Head of Finance & Property. | **Background Papers** | **Location** | |------------------------------------------|-----------------------------------| | Previous Year's Budget Reports | Head of Finance & Property | | Local Authority Financial Settlement Data | Head of Finance & Property |

### GENERAL FUND BUDGET 2019/20 TO 2023/24

#### APPENDIX 1

| Approved Budget | Budget 2019/20 | Budget 2020/21 | Budget 2021/22 | Budget 2022/23 | Budget 2023/24 | |-----------------|----------------|----------------|----------------|----------------|----------------| | **£** | **£** | **£** | **£** | **£** | **£** | | **SERVICE BUDGETS** | | | | | | | 501,300 | 426,600 | 407,400 | 413,700 | 420,000 | 426,700 | | 2,490,700 | 2,520,700 | 2,427,100 | 2,455,200 | 2,482,800 | 2,579,400 | | 2,888,200 | 3,017,400 | 2,932,100 | 2,820,700 | 2,813,700 | 2,858,200 | | 151,500 | 169,700 | 178,900 | 190,700 | 182,400 | 184,200 | | 6,492,500 | 6,393,300 | 6,489,400 | 6,586,900 | 6,683,400 | 6,782,000 | | 2,611,900 | 2,760,600 | 1,915,100 | 1,944,800 | 1,980,900 | 2,033,000 | | 310,200 | 412,100 | 323,600 | 321,800 | 330,800 | 340,000 | | **Total Net Cost of Services** | **15,699,300** | **14,673,500** | **14,723,800** | **14,894,000** | **15,203,500** | | **OTHER BUDGETS** | | | | | | | 100,000 | 100,000 | 100,000 | 100,000 | 100,000 | 100,000 | | 50,000 | 50,000 | 50,000 | 50,000 | 50,000 | 50,000 | | 100,000 | 100,000 | 100,000 | 100,000 | 100,000 | 100,000 | | 0 | 0 | 0 | 0 | 0 | 0 | | (175,000) | (350,000) | (175,000) | 0 | 0 | 0 | | **Total Other Budgets** | **(100,000)** | **75,000** | **250,000** | **250,000** | **250,000** | | 653,200 | 670,000 | 691,300 | 721,300 | 703,500 | 713,000 | | (79,000) | (85,000) | (80,000) | (80,000) | (80,000) | (80,000) | | 7,700 | 7,700 | 7,700 | 7,700 | 7,700 | 7,700 | | (3,000) | (1,000) | (1,000) | (1,000) | (1,000) | (1,000) | | 1,500 | 1,500 | 1,500 | 1,500 | 1,500 | 1,500 | | **Net interest and borrowing costs** | **593,200** | **619,500** | **649,300** | **631,700** | **641,200** | | 486,600 | 496,300 | 506,200 | 516,300 | 526,700 | 537,200 | | 1,950,000 | 1,866,000 | 1,902,000 | 1,941,500 | 1,941,500 | 1,941,500 | | 1,076,000 | 1,130,000 | 1,185,000 | 1,185,000 | 1,185,000 | 1,185,000 | | **Total Council Net Budget** | **16,031,900** | **14,875,700** | **15,193,700** | **15,591,100** | **15,641,000** | | **FUNDING BY** | | | | | | | (734,000) | (223,900) | 0 | 0 | 0 | 0 | | 12,420,400 | 12,596,500 | 11,335,900 | 11,335,900 | 11,335,900 | 11,335,900 | | (16,322,200) | (16,587,700) | (15,550,900) | (15,550,900) | (15,550,900) | (15,550,900) | | **Sub-total: Start-up Funding Assessment** | **(4,215,100)** | **(4,215,000)** | **(4,215,000)** | **(4,215,000)** | **(4,215,000)** | | (4,635,800) | (4,700,400) | 0 | 0 | 0 | 0 | | (1,549,370) | (1,493,800) | (1,393,800) | (1,293,800) | (1,293,800) | (1,293,800) | | (582,000) | (621,000) | (621,000) | (621,000) | (621,000) | (621,000) | | (50,000) | (100,000) | (100,000) | (100,000) | (100,000) | (100,000) | | (1,208,600) | (862,600) | (872,000) | (883,000) | (968,000) | (650,000) | | (134,800) | (130,000) | (130,000) | (130,000) | (130,000) | (130,000) | | (95,500) | (124,800) | (71,100) | (71,100) | (71,100) | (71,100) | | (677,000) | (846,000) | 0 | 0 | 0 | 0 | | (5,767,400) | (6,036,200) | (6,287,800) | (6,544,800) | (6,807,200) | (7,075,100) | | (1,076,400) | (1,130,000) | (1,185,000) | (1,185,000) | (1,185,000) | (1,185,000) | | **Total Funding** | **(11,816,800)** | **(10,860,700)** | **(10,976,700)** | **(11,376,100)** | **(11,426,000)** | | **GENERAL FUND BALANCES:** | | | | | | | **Balance @ 1 April** | **1,939,000** | **1,939,000** | **1,939,000** | **1,939,000** | **1,939,000** | | **Movement in year** | 0 | 0 | 0 | 0 | 0 | | **Balance @ 31 March** | **1,939,000** | **1,939,000** | **1,939,000** | **1,939,000** | **1,939,000** |

(5,024,530) REPORT OF THE DIRECTOR OF CORPORATE RESOURCES

CALCULATION OF COUNCIL TAX BASE 2019/20

Cabinet Member: Finance Contact: D Hill Ext. 3174

1. Public Interest test 1.1 The author of the report, David Hill, has determined that the report is not confidential.

2. Purpose of the Report 2.1 To set out and approve the calculation of the Council’s 2019/20 tax base as required by The Local Government Finance Act 1992 in accordance with The Local Authorities (Calculation of Council Tax Base) (England) Regulations 2012.

3. Background and Discussion 3.1 The Local Authorities (Calculation of Council Tax Base) Regulations 2012 (the council tax base regulations), specify the formulae for calculating the council tax base, which must be set each year between 1st December and 31st January.

3.2 The ‘billing authority’ must calculate the tax base based on information contained in its Council Tax valuation list on the 30th November in the year immediately preceding.

3.3 The tax base calculations for Bassetlaw are also used by Nottinghamshire County Council as well as the Nottinghamshire Police and Crime Commissioner and Combined Fire Authority to determine their respective levies for 2019/20. Additionally, the figures are used by the 56 local parish and town councils throughout Bassetlaw.

3.4 The council tax base is a measure of the number of dwellings on which council tax is chargeable in an area or part of an area. It is used for the purposes of calculating an authority's band D council tax. The tax base calculation has changed to take into account the introduction of the local council tax support scheme which commenced in 2013/14.

3.5 Under the new local council tax reduction scheme, the council tax base is affected by whether persons living in a dwelling within an authority area are in receipt of a council tax reduction awarded under the scheme, as the billing authority foregoes council tax income from those dwellings. These local council tax reductions are reflected in the calculation of the council tax base, in order to calculate the correct amount of band D council tax for the billing and precepting authorities in the area.

3.6 For Council Tax purposes, properties are placed in different property ‘bands’ based broadly on the value of the property, using April 1991 as the baseline valuation date. The band is used to determine the Council Tax levied for that property.

3.7 The Council’s basic tax figure is calculated in respect of band D. Other bands are then calculated as a fraction of the tax at band D.

The fractions applicable to the various Council Tax bands are as follows:

| Band | A | B | C | D | E | F | G | H | |------|-------|-------|-------|-------|-------|-------|-------|-------| | Fraction | 6/9ths | 7/9ths | 8/9ths | 9/9ths | 11/9ths | 13/9ths | 15/9ths | 18/9ths |

3.8 The tax base calculation is determined by identifying the number of properties liable to be levied and the banding in which the properties are placed and then applying relevant exemptions, discounts, including the local council tax reduction scheme, surcharges and banding reductions. The information is compiled for each parish and the authority’s tax base is built up from these bands. The resultant figures are then adjusted to the number of band D equivalents by applying the proportions shown above.

3.9 As can be seen in Appendix 1, the total number of dwellings in Bassetlaw is 52,518 (line 1). Once adjusted for discounts, exemptions, premiums and band reductions this figure reduces to 47,727.50 (line 14). The total is then converted into the number of band D equivalents, 39,268.67 (line 16). The figure is finally adjusted for the local Council Tax reduction scheme (line 18) to produce the tax base figure of 35,341.23 properties (line 19).

3.10 The final band D equivalent figure is then further adjusted to allow for a provision of growth of housing stock, additional requirements relating to Council Tax reduction scheme changes, anticipated losses on collection, and any other relevant unforeseen adjustments. A final tax base figure is then obtained, shown on Appendix 1 as 34,794.99 band D properties.

3.11 Regulations under the Localism Act enacted as an amendment to LGFA 1992 state that a Council should calculate a tax base. The tax base recommended on the attached appendices is 34,794.99 properties, net of reduction, discounts and growth. This tax base shows an increase in band D equivalents of 563 properties compared to the tax base set for 2018/19. This in turn will result in additional income for all preceptors.

3.12 In a report of the Director of Resources to Cabinet on 4th December 2012, it was agreed that ‘the amount of Council Tax payable in respect of long term empty dwellings after the 2 year period, be increased by 50% where regulations permit’. Under the Rating (Property in Common Occupation) and Council Tax (Empty Dwellings) Act 2018, Councils have been given the power, by amending the Local Government Finance Act 1992, to increase the long term empty premium to 100% for 2019/20 where the property has been empty for more than 2 years.

3.13 The calculation of this tax base has assumed implementation of the powers contained in section 12 of the Local Government Finance Act 1992 (which is amended at section 11b by the 2018 Act) 4. **Implications**

a) **For Service Users**

The tax base forms the basis of the Council Tax levels for 2019/20 for Bassetlaw's Council Tax payers. The amount required to be met from Council Tax for 2019/20 (to be approved by Council on 7th March 2019) will be divided by the tax base set to determine the Bassetlaw District Council charge.

b) **Strategic & Policy**

The income received from Council Tax is key to financing the provision of Council services.

c) **Financial – Financial Ref. 19/16**

The tax base forms the basis of the Council’s Council Tax setting resolution for 2019/20, which is due to be considered by full Council on 7th March 2019.

The adjusted Bassetlaw tax base must be notified to Nottinghamshire County Council and to respective Police and Fire Authorities before 31st January 2019.

The Parish tax base figures are notified individually to the Parish Councils in order that they may determine their level of precept on Bassetlaw District Council.

The tax base calculation performed as at 30th November 2018 is subject to a collection rate factor which has been set at 98%.

d) **Legal – Legal Ref. 204/01/2019**

The relevant regulations place a legal requirement on a billing authority to set a tax base.

e) **Human Resources**

None from this report.

f) **Community Safety, Equalities, Environmental**

None from this report.

g) **Whether this is a key decision, and if so the reference number.**

This is key decision number 727.

5. **Options, Risks and Reasons for Recommendations**

5.1 The Council has a statutory obligation to set a tax base and to notify precepting authorities. To not set a tax base would mean a breach of the statutory requirement and there would be no basis on which to set a Council Tax for 2019/20. 5.2 Setting the Council tax base is the first step in determining the Council Tax for 2019/20. The tax base must be determined and notified to other relevant bodies by 31st January each year.

6. **Recommendations**

6.1 Cabinet agrees that the Council tax base for the year 2019/20 shall be 34,794.99 band D properties, subject to the Council Tax Reduction Scheme being agreed as proposed.

6.2 That Cabinet recommends to Council the calculations set out in Appendix 1 to agree the Council tax base calculation for the district for 2019/20 and instructs officers to notify this figure to the major precepting authorities.

6.3 That Cabinet recommends to Council the calculations set out in Appendix 2 figures which are tax bases for parts of the area and instructs officers to notify the 2019/20 tax base to Town and Parish Councils, Parish Meetings and Charter Trustees as soon as is practicable.

6.4 That Cabinet recommends to Council that the additional premium charge levied to properties that have been empty for a period in excess of 2 years, be increased from 50% and set at 100% for the year 2019/20.

## Bassetlaw District Council - Council Tax Base 2019/20

### Appendix 1

| Dwellings shown on the Valuation List for the authority on 30th November 2018 | Band A entitled to disabled relief reduction | Band A | Band B | Band C | Band D | Band E | Band F | Band G | Band H | TOTAL | |---|---|---|---|---|---|---|---|---|---|---| | 1 | Total number of dwellings on the Valuation List | 26,920 | 7,793 | 6,349 | 6,112 | 3,106 | 1,492 | 689 | 57 | 52,518 | | 2 | Number of dwellings on valuation list exempt on 30th November 2018 (class B to W exemptions) | 411 | 75 | 75 | 40 | 19 | 11 | 7 | 2 | 640 | | 3 | Number of demolished dwellings on 30th November 2018 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | | 4 | Number of chargeable dwellings on 30th November 2018 (lines 1-2-3) | 26,509 | 7,718 | 6,274 | 6,072 | 3,087 | 1,481 | 682 | 55 | 51,878 | | 5 | Number of chargeable dwellings in line 4 subject to disabled reduction on 30th November 2018 | 149 | 56 | 64 | 53 | 30 | 19 | 15 | 12 | 398 | | 6 | Number of chargeable dwellings effectively subject to disabled relief on the Band by virtue of disabled relief (lines 4-5+6) | 149 | 56 | 64 | 53 | 30 | 19 | 15 | 12 | 398 | | 7 | Number of chargeable dwellings adjusted in accordance with Band C (lines 4-5+6) | 149 | 26,416 | 7,726 | 6,263 | 6,049 | 3,076 | 1,477 | 679 | 43 | 51,878 | | 8 | Number of dwellings in line 7 entitled to a 25% discount by virtue of occupancy on 30th November 2018 | 52 | 10,977 | 2,487 | 1,770 | 1,279 | 524 | 226 | 78 | 6 | 17,399 | | 9 | Number of dwellings in line 7 entitled to a 50% discount by virtue of occupancy on 30th November 2018 | 1 | 27 | 14 | 6 | 14 | 9 | 13 | 24 | 2 | 110 | | 10 | Number of dwellings in line 7 entitled to a 25% discount by virtue of being empty less than 6 months on 30th November 2018 | 433 | 81 | 46 | 37 | 17 | 9 | 7 | 1 | 631 | | 11 | Number of dwellings in line 7 entitled to a 25% discount by virtue of being empty and uninhabitable on 30th November 2018 | 20 | 1 | 7 | 11 | 0 | 1 | 0 | 0 | 40 | | 12 | Number of dwellings in line 7 subject to a 50% surcharge by virtue of being empty more than 2 years on 30th November 2018 | 96 | 14,959 | 5,143 | 4,434 | 4,708 | 2,526 | 1,228 | 570 | 34 | 33,698 | | 13 | Number of dwellings in line 7 subject to a 50% surcharge by virtue of being empty more than 2 years on 30th November 2018 | 120 | 36 | 16 | 20 | 9 | 4 | 5 | 1 | 211 | | 14 | Total equivalent number of dwellings after discounts, exemptions and disabled relief (to 2 decimal places) | 135.50 | 23,785.00 | 7,148.75 | 5,836.25 | 5,750.25 | 2,964.25 | 1,419.50 | 655.75 | 42.25 | 47,727.50 |

| 15 | Ratio to Band D | 5/9 | 2/3 | 7/9 | 8/9 | 1 | 1 | 2/9 | 1 | 4/9 | 1 | 2/3 | 2 | | | Number of Band D equivalents (to 2 decimal places) (line 14 x line 15) | | | | | | | | | |---|---|---|---|---|---|---|---|---|---| | 16 | 75.28 | 15,858.67 | 5,560.14 | 5,187.78 | 5,750.25 | 3,610.75 | 2,050.39 | 1,092.92 | 84.50 | 39,268.67 | | 17 | Tax base for Revenue Support Grant purposes | | | | | | | | | 39,268.67 | | 18 | Reduction in tax base due to Council Tax Reduction Scheme | | | | | | | | | 3,927.44 | | 19 | Tax base before adjustment for growth | | | | | | | | | 35,341.23 |

- Estimate of dwellings due for completion by 31.03.19 not yet on Valuation List: 144.22
- Estimate of new building coming on stream in 2019/20: 119.67
- Growth in Council Tax Reduction Scheme due to additional take up: 100.00

Total: 35505.12 Collection Adjustment (98%): 710.13 Taxbase for Bassetlaw for 2019/20 (2018/19 in brackets): 34,794.99 (34231.95) | Parish/Town | Area Council Tax Base | |------------------------------------------------|-----------------------| | Askham | 82.80 | | Babworth | 223.47 | | Barnby Moor | 118.44 | | Beckingham-cum-Saundby | 478.44 | | Blyth | 490.50 | | Bole | 54.54 | | Bothamsall | 91.53 | | Carburton | 25.47 | | Carlton-in-Lindrick | 1625.22 | | Clarborough & Welham | 393.21 | | Clayworth | 143.55 | | Clumber & Harwick | 31.68 | | Dunham-on-Trent with Ragnall, Fledborough & Darlton | 222.48 | | East Drayton | 117.09 | | East Markham | 495.90 | | East Retford Charter Trustees | 6997.05 | | Elkesley | 242.46 | | Everton | 372.15 | | Gamston with West Drayton & Eaton | 247.05 | | Gringley-on-the-Hill | 347.31 | | Harworth & Bircotes | 2084.04 | | Haughton | 20.79 | | Hayton | 158.94 | | Headon-cum-Upton with Grove & Stokeham | 161.37 | | Hodsock | 597.42 | | Holbeck & Welbeck | 138.87 | | Laneham | 151.20 | | Lound | 200.61 | | Markham Clinton | 93.87 | | Mattersey | 246.06 | | Misson | 270.72 | | Misterton | 723.06 | | Nether Langwith | 139.50 | | Normanton-on-Trent with Marnham | 202.95 | | North & South Wheatley | 272.43 | | North Leverton with Habblesthorpe | 340.74 | | Norton Cuckney | 141.21 | | Rampton | 285.12 | | Ranskill | 512.19 | | Rhodesia | 236.61 | | Scaftworth | 18.99 | | Scrooby | 131.49 | | Shireoaks | 458.64 | | South Leverton | 197.91 | | Sturton-le-Steeple | 196.38 | | Styrrup with Oldcotes | 252.99 | | Sutton | 259.83 | | Torworth | 84.60 | | Treswell with Cottam | 123.75 | | Tuxford | 802.71 | | Walkeringham | 355.50 | | Wallingwells | 15.12 | | West Burton | 8.10 | | West Stockwith | 116.55 | | Wiseton | 44.10 | | Worksop Charter Trustees | 11950.29 | | TOTAL | 34794.99 | REPORT OF THE DIRECTOR OF CORPORATE RESOURCES

PROPERTY ASSET MANAGEMENT PLAN 2019/20 UPDATE

Cabinet Member: Finance Contact: Dave Hill Ext: 3174

1. Public Interest Test 1.1 The author of this report, David Hill, has determined that the report is not confidential.

2. Purpose of the Report 2.1 For Members to approve the 2019/20 update to the Property Asset Management Plan 2015/16 to 2019/20 approved by Cabinet in February 2015.

3. Background and Discussion 3.1 In order to ensure that the Council is managing its assets more effectively, an up to date Asset Management Plan is essential.

3.2 This Asset Management Plan sets out how the Council’s Property Portfolio will contribute to the Council’s main aims/key priorities identified in the Council Plan.

3.3 The appendix provides an update to the Property Asset Management Plan 2015/16 to 2019/20 with regard to:

- Co-location of services;
- Maintaining assets (including condition surveys);
- Investment portfolio review;
- Property disposals.

3.4 This is the last year of the current Property Asset Management Plan. A complete and comprehensive review of the Plan will need to take place in 2019/20 in order to produce a meaningful Plan for the next 5 years. 4. **Implications**

a) **For Service Users**

By adopting the Property Asset Management Plan the service delivery to customers of the authority will be enhanced.

b) **Strategic and Policy**

The Asset Management Plan is a five-year plan which is reviewed annually.

c) **Financial – Ref: 19/4**

There are no immediate financial implications arising from this report. However, over the next financial year, assets may be acquired and disposed of, whereby further reports will be presented to Cabinet for approval with the full financial implications outlined.

d) **Legal – Ref: 209/01/2019**

The legal implications are as contained within the report.

e) **Human Resources**

None contained in this report.

f) **Community Safety, Equalities, Environmental**

Any implications are outlined in the Asset Management Plan. The Council’s non-operational assets are occupied by a variety of organisations on a contractual basis. The Council seeks to eliminate access discrimination in accordance with the Equality Act 2010.

g) **This is key decision number 728.**

5. **Options, Risks and Reasons for Recommendations**

5.1 The Property Asset Management Plan is a key document that sets out how assets are effectively managed to support the efficient delivery of its priorities.

6. **Recommendations**

6.1 That the Cabinet recommends approval of the Property Asset Management Plan 2019/20 update to the Extraordinary Council on 31st January 2019.

**Background Papers**

| Property Asset Management Plan 2015/16 to 2019/20 | Location | |--------------------------------------------------|----------| | QB Estates Unit - Floor 2 | | BASSETLAW DISTRICT COUNCIL

PROPERTY ASSET MANAGEMENT PLAN

2019/20 UPDATE 1 FORWARD

The purpose of the plan is to ensure that the Council’s property holdings are aligned to meet strategic priorities and service needs to ensure that the right property is available in the right place, and at the right time.

The goal is to get the most from our assets as they support the provision of Council services and the delivery of our priorities. The Council will be judged on the quality of the services it delivers not the quality of its buildings, but those land and property assets do support the ongoing provision of the services provided to businesses and residents in the District. Property remains the second highest cost incurred by most public authorities after expenditure on staff, and its effective and efficient management is key to being able to deliver value for money and quality services.

The Property Asset Management Plan for 2015/16 to 2019/20 details an effective strategy and robust operational plan for the management of Bassetlaw District Council’s significant land and building assets over a 5 year period.

Bassetlaw District Council operates a substantial property portfolio comprising of approximately 1,100 Operational Properties with a total combined asset value of just over £47.0 million.

2 Bassetlaw District Council Plan 2017-20

The Council identified the following priorities in the Council Plan 2014 - 2017:

- Driving Efficiency and Resilience
- Supporting Business and Growth
- Enhancing Home and Place

The Council’s land and property assets provide a key to the delivery of its services to residents of the District and delivery of these Corporate Priorities. The Asset Management Plan provides a summary of how the Council uses its land and property assets to contribute towards ambitions, whilst at the same time:-

- Supports improvements to service delivery;
- Continues to provide a significant income through property rents and capital receipts;
- Identifies and drives out efficiencies, such as co-location of services.

The Asset Management Plan is also prepared alongside the Capital Investment Strategy in order to ensure that our plans are financially sustainable. The focus of the Strategy is towards optimising the use of the Council’s land and buildings in terms of service benefit, affordability and best value for money.

The intention is to create an improved and well planned property portfolio, that is fit for purpose and able to meet changing requirements whilst at the same time is also one that costs less to run, and able to release funds to invest in improved delivery of front line services for the benefit of the community.

Specifically, the objectives are:

- To have sufficient, fit for purpose, well maintained and managed property in the right locations to meet the need of services, including community facilities in district and local centres.

- To identify opportunities for “Total Place Initiatives” in order to reduce the number of administrative office buildings in the outlying district and to identify co-location opportunities to share with public sector partners where this benefits the parties in supporting improved service delivery or efficiency.

- To make investment in property that is prioritised corporately according to strategic need and to enhance the Council’s commitment to the environment.

- To continue to support and promote regeneration and economic development and employment opportunities within the district.

- To support transformation of service delivery and community infrastructure using strategic property solutions.

- To have an estate that is fit for purpose for the delivery of all Council Services.

- To only retain investment property that generates strong income streams to help fund asset maintenance and support service delivery.

- To identify development opportunities that will encourage business into the district and with this create employment opportunities.

- To use Council land holdings to support affordable housing. 2.1 Asset Management

Linkages with the Council Plan

Supporting Business and Growth

- Reduce running Costs
- Maximise the use of the Council's assets
- Enhancing Home and Place
- Driving Efficiency and Resilience
- Maximise our property portfolio to increase our business base
- Ensuring that residents have access to shared services across the District
- Increase the supply of affordable homes in the District by the identification of sites in BDC ownership
- Working in partnership with the DWP by making available suitable premises
- Ensure new developments provide and contribute towards the infrastructure of the local area and to the benefit of local communities 3 CO-LOCATION OF SERVICES

Continuing on from the earlier lettings of surplus office space within the former County Council Wing to the Two Shires Credit Union and the Worksop CAB, the DWP occupied a substantial part of the ground floor of Queens Buildings from May 2015. This letting not only improved services to users but also reinforced Queens Buildings’ as a “hub” for the provision of jointly located local services. During the summer of 2018, Notts Police moved into the second and third floors of the former County Council wing. The above lettings have provided the Council with a new source of income in terms of rent and savings on building running costs recovered amounting to around £146k per annum.

Nottinghamshire Police occupied of two floors at 17b The Square at Retford from January 2016. Their relocation into the Council’s building not only ensured presence of a local police station in the town centre but utilised unused office space in the building and by doing so this has reduced the Council’s running costs of the building. The letting to the police at 17b The Square produced a further income of £22k per annum from office space that would have been otherwise vacant.

Substantial rebuilding works have been completed at Queens Buildings which has created open plan offices on all the floors of the building. Not only has this made better use of the available space and improved the overall working environment, this enabled the vacant office space within the Old Town Hall to be available for refurbishment.

Currently all the space in Queens Buildings and the former County Wing is either occupied or earmarked for occupation in the near future.

4 MAINTAINING ASSETS

An essential part of Asset Management is for an effective Planned Maintenance Policy and a thorough understanding of the condition of the property portfolio in order that strategic decisions can be made with full information.

Physical condition surveys were undertaken on 66 properties and sites around 5 years ago. That survey divided the buildings or sites up into a number of elements which is then allocated a condition category from A to D. Each element also has a “repair budget required” allocated to it as well as an identified life expectancy until that element requires repair or replacement.

Where only a repair is identified for an element the budgeted sum reflects an upgrade to condition B (which is defined as “satisfactory - performing as intended but exhibiting minor deterioration”). There may be circumstances where a different standard is appropriate for example a short life building used for a temporary purpose. In all cases however the asset must comply with statutory requirements such as health and safety, disabled access, food hygiene.

A new condition survey of all properties (excluding housing assets managed by A1 Housing) has been completed and the extent of the backlog maintenance costs identified from this work are currently being considered. From this work a new five-year planned maintenance programme is identified for each property taking into account repairs and maintenance, fire risk recommendations, access improvements and essential health and safety work. The surveys will be carried out for properties where the Council has a direct repairing obligation.

The aim of the programme is to ensure that the Council's assets remain fit for purpose and to shift the focus of maintenance closer to the RICS best practice ratio of 60% (planned) – 40% (responsive) where sufficient funds exist. Overall, this approach should reduce the cost of maintenance over the life of the programme.

The five-year planned maintenance programme is monitored annually to assess the true maintenance backlog for Council properties. The identified backlog for each property will be the difference in work carried out in year against the identified programme.

When possible, the opportunity to dispose of vacant and underused properties will continue to be considered with a view to further reduce backlog maintenance and generate capital receipts. One property identified was the Regal at Carlton Road, Worksop. Terms for the sale of the Regal Cinema have also been agreed thereby reducing the backlog maintenance figure by a further £900k.

5. INVESTMENT PORTFOLIO REVIEW

The existing work plan was amended following consideration of the recently completed Employment Land Review. One of the outcomes this review identified is that several of the existing industrial estates are to be earmarked for disposal or redevelopment. The first industrial estate to be disposed of was Old Brewery Yard which generated a capital receipt of £372,000 but also had a back-log maintenance liability of £375,000.

One of the older industrial buildings at the Leverton Road Industrial Estate Retford is currently under review with the intention of preparing a business case for its demolition and replacement with new units.

Following a cabinet report recommending that unused land within the Harrison Drive Industrial Estate at Langold be developed to create a further four industrial units available for letting. Funding was identified to build 4 new units and building works have just started on site and the new units will be available to let from June 2019.

5.1 Key Strengths

- Varied Portfolio with historically relatively very low void rates, remaining at around 2%.

5.2 Areas for Improvement

- Due to staff changes there are a wide variety of lease and tenancy agreements that have been adopted and a standard approach is required.

- The stock has remained static over the last five years and there is significant potential through ring fencing to adopt a disposal/re-investment strategy to increase income and provide new assets.

- As referred to above, there is an ongoing piece of work to establish the viability of developing up to 4 new additional industrial units on vacant BDC owned land within the Harrison Drive Industrial Estate at Langold • Ongoing Programmed Property Maintenance (PPM) is required in order to ensure that investment assets are fit for purpose.

• The new Property Management software needs to be fully populated with data, potentially using the i Dox system used elsewhere in the Council

• More effective management of tenant rent arrears through early contact and use of bailiff action where necessary.

5.3 Threats

• Market volatility/demand for properties held in portfolio.

• Property condition and changes in legislation that will impact on the ability to let poorer quality properties. The RICS website reports the following:

“As from the 1st April 2018 there will be a requirement for any properties rented out in the private rented sector to normally have a minimum energy performance rating of E on an Energy EPC. The regulations will come into force for new lets and renewals of tenancies with effect from 1st April 2018 and for all existing tenancies on 1st April 2020. It will be unlawful to rent a property which breaches the requirement for a minimum E rating, unless there is an applicable exemption. A civil penalty of up to £4,000 will be imposed for breaches. There are separate regulations effective from 1st April 2016 under which a tenant can apply for consent to carry out energy efficiency improvements in privately rented properties.”

• Tenant default (failure to pay rent and comply with repair covenants).

• Property voids.

5.4 Key Objectives

• Property management to maximise investment return in line with market conditions.

• Debt management through liaison with tenants and if necessary, bailiff action to recover arrears

• Minimise letting voids through pro-active property management

• Performance is challenged continuously and poorly performing properties are identified through benchmarking/performance measures. Assessments are to be made in respect of further investment or disposal

• Undertake maintenance on a planned basis to maintain asset life, repairs to take into account whole life costing

• To seek to acquire new properties where possible which can generate a financial return for the Council greater than that obtained for alternative non-property investments held by the Council in order to enhance the income streams outlined above.

- The disposal of underperforming assets as identified in the employment land review in order to reduce the Council’s costs in terms of management and day to day maintenance and to provide a source of income to reinvest in replacement income producing assets.

6 PROPERTY DISPOSALS

6.1 Key Objectives

- To generate capital receipts that can be reinvested in services or other assets that meet the needs of the organisation.

- To focus on the sale of non-income generating assets to minimise income loss as far as possible in the early stages of the programme and then through a robust property review exercise.

- As the supply of surplus property and development land comes to an end, future disposals will be prioritised based on investment performance as identified in the performance management framework.

- Investment and disposal decisions are based on thorough option appraisal and whole life costs.

- Achieve efficiency savings through disposal of surplus operational property.

- Strategic Service Priorities.

- Regeneration.

- Identification of joint service delivery and partnership working.

- Co-location.

- Property rationalisation.

- Community transfer of assets.

- Sustainability.

6.2 Disposal Work plan

A work plan has been developed which details priority actions under this Strategy. The disposal of surplus property assets provides funding that will help deliver priorities. Increasingly the identification, marketing and subsequent disposal of surplus, under-utilised or under-performing property has become a priority for the Council. However the timing of these disposals must have regard to the prevailing market conditions in order to ensure that the maximum benefit to the Council is achieved. The workplan for 2019/20 includes the following:

- Sale of electricity sub-station sites across the district;
- Land at Broad Gores, Clarborough; Terms now agreed for a sale and with legal
- Land at Turner Road, Worksop; - Terms now agreed and with legal
- Land off Kingston Road, Worksop (in conjunction with the County Council);
- Land at Newgate Street/Bridge Street, Worksop. this sale will complete Spring 2019
- Land and Buildings at Rectory Road, Retford - Terms now agreed for a sale
- The potential disposal of The Regal, Carlton Road, Worksop - Terms now agreed for a sale and with legal
- Proposed sale of 88/90 Albert Road, Retford.

During financial year 18/19 the Estate Division undertook number of garage site sales generating a capital receipts of £295k from the sale of 5 sites, all of these sites were underused and producing minimal levels of income

The disposals work plan outlines the processes to be followed in terms of initial consultations to confirm that surplus premises are not required elsewhere within the authority, through to marketing and final disposal of the property interest. The Capital Programme remains dependent upon the generation of capital receipts from the sale of assets.

There will be opportunities to dispose of land and buildings to Bersahill Ltd; the Council joint venture with Robert Woodhead Ltd. Agreed sales to the JVC will be a full market value and with the intention of creating quality housing developments.

It is important to understand that this is a finite resource and the capital receipts generated from future disposals which are not linked to future initiatives and can be used as an unfettered receipt is relatively low in both number and value.

The impact of the current economic climate and the remaining significant uncertainty regarding the timescale for economic recovery renders the development of a disposals work plan for a 5-year period that can be relied upon as somewhat problematic. It is not possible to predict when the market will recover, or what values will be achieved post recovery. Nevertheless, opportunities to dispose of surplus assets should still be pursued, in particular where these represent an ongoing liability to the Council regardless of the current market conditions. Whilst there are signs of property markets improving locally the position overall remains sluggish and significant improvement in the near future is unlikely.